BT investors will cast a keen eye over the telecoms giant's half-year results this Thursday, searching for guidance on future dividend payouts.
Analysts have pencilled in second-quarter revenue of £6bn with earnings of £1.8bn. Company supplied consensus figures also suggest BT is on track to generate £24.1bn of annual revenue.
In May, BT changed its dividend policy from at least 10 per cent growth to "progressive".
Jerry Dellis, an equity analyst at Jefferies, said: "A dividend cut cannot be ruled out."
During 2017, BT's cash flow has been hit by the fall out from a £530m accounting black hole in its Italian arm, record regulatory fines and top-up payments into one of the largest pension schemes in the FTSE 100.
However, RBC Capital analysts have crunched the numbers on some of the UK's biggest pensions and think BT could spring a surprise. Analyst Wilton Fry said BT's deficit could fall – rather than rise – by as much as 54 per cent to £4.4bn.
Paul Sidney, a research analyst at Credit Suisse, warned it was "getting tougher for BT to raise prices". He said a price hike in April led to a "sharp slowdown" in the number of new broadband customers it was attracting.
We had already assumed a substantial slowdown in BT consumer wireline price inflation, but we continue to believe a more significant deterioration in the UK economy could further pressure our BT forecasts.
BT's Openreach arm is forecast to be the most lucrative for the group. It is expected to generate £1.3bn of revenues, which will flow through to £607m of earnings. This compares with BT's overseas global services arm, which also makes around £1.3bn in sales over the quarter but translates to only £87m in earnings.