Chief executive Philip Jansen, who recently recovered from Covid-19, said a new target of full fibre to 20 million homes by the mid to late 2020s is now in place.
To hit the new target, BT will spend £1.3 billion over five years, with benefits of £1bn by 2023 and £2bn by 2025.
Dividends for the business, which also owns the EE mobile network, are expected to return by 2022 at 7.7p a share, the company added.
Jansen said: “BT had a positive year delivering results in line with expectations and completing our £1.6bn phase one transformation programme, one year ahead of schedule.
“Of course, Covid-19 is affecting our business, but the full impact will only become clearer as the economic consequences unfold over the next 12 months. Due to Covid-19, BT is not providing guidance for 2020/21 at this time.
“BT has the best network infrastructure in the UK. We have the leading 4G network and are rapidly expanding our leadership position in 5G, that today covers over 80 towns and cities.”
He said the new five-year plan would “re-engineer old and out-of-date processes, rationalise products, reduce re-work and switch off many legacy services.”
Chairman Han du Plessis said: “Recognising the importance of dividends to our shareholders, the board’s decision in relation to the dividend has been exceptionally difficult.
“BT plays a key role in sustaining critical national infrastructure – as magnified by the Covid-19 crisis – and many stakeholders trust and rely on the connectivity we provide.”
The decision came as revenues dipped 2 per cent to £22.9bn in the year to 31 March, due to declines in legacy products and impacts from regulation.
Pre-tax profits were down from £2.67bn to £2.35bn, including a £95 million charge due to the pandemic increasing debt.
John Moore, senior investment manager at Brewin Dolphin, said: “BT’s decision to suspend its dividend for the year and rebase future dividends is another hammer blow for pension funds and income investors, an army of which own its shares.
“The move only adds to the raft of cuts in recent weeks and will have many questioning where they can find reliable investment income in this difficult time.”
Richard Hunter, head of markets at Interactive Investor, noted: “BT has identified that something radical was required to shake up its business and the transformation plan could conceivably deliver this if successful.”