BT has opened the door to external investors funding an expansion of its fibre network for the first time after the UK telecoms group said it would explore joint venture options over the coming months.

The FTSE 100 company said on Thursday that it would increase its fibre broadband build to 25m homes by 2026, up from a previous target of 20m. BT said it can cover the cost of the expansion but it believes third parties helping fund the additional 5m homes will deliver better shareholder value.

The potential creation of a joint venture fibre investment vehicle follows similar activity in countries including France and the Netherlands where telecoms companies have teamed up with pension funds and infrastructure investors to provide capital for faster network upgrades.

The total cost of BT’s fibre rollout to 25m homes is £15bn and the expansion will create an additional 7,000 jobs.

Philip Jansen, chief executive of BT, said that the company expects to conclude talks with potential partners by September over terms of a deal.

He said that the extra 5m would include 1.5m houses in rural areas but all homes in the joint venture would be in commercially viable areas. “There is so much appetite for investing in this type of infrastructure,” he said.

BT has been exploring ways to unlock the value of its Openreach network division over the past year including options to bring in outside investors. It faces competition from Virgin Media, CityFibre and smaller ‘alt-nets’ that are investing billions of pounds to build new fibre networks.

BT’s fibre investment plan means its capital expenditure will peak at about £5bn a year, a sum Jansen described as “eye watering” but necessary. “BT is firmly positioned to pivot to growth,” he said.

Shares dropped 5 per cent in morning trading because of the sharp increase in expenditure to fund the fibre build.

Telecoms regulator Ofcom recently unveiled a regulatory framework to stimulate upgrades to broadband infrastructure that helped BT start its expansion plan.

The government’s “super deductor” tax relief, announced in the March Budget and designed to stimulate investment, was another factor. BT said that its tax payments, which typically amount to between £200m and £300m annually, would be minimal in the next few years because of its investment.

The group also said that its pension deficit, a drag on its cash flow, had fallen to £8bn from almost £12bn three years ago and unveiled a new funding plan for the scheme that will reduce its burden. This includes an agreement with trustees to secure a portion of the payments against the value of its EE mobile arm, a move it said would provide tax relief and spread the cash injections needed to close the deficit over a longer period.

The fibre expansion comes during a period of upheaval for BT. In recent months it has participated in a 5G auction, put its BT Sport division on the block and started the hunt for a new chair after a boardroom spat led to the resignation of Jan du Plessis.

It has also been threatened with industrial action by the Communication Workers Union over restructuring plans designed to save costs and modernise the company. BT said on Thursday that it had called a truce with the CWU this month and Jansen said “constructive discussions” have restarted.

The news came as BT reported a 7 per cent fall in revenue for the year to March to £21.3bn while pre-tax profit dropped 23 per cent to £1.8bn, due to the impact of the pandemic on its consumer and business units.

It forecast revenue in the current year to be flat with adjusted earnings before interest, tax, depreciation and amortisation between £7.5bn and £7.7bn, up from £7.4bn in the year to March.

Dividend payments, which were suspended last year to preserve cash, will resume at 7.7p, half the level paid out in 2019.