BT reiterates £1 billion cost saving target

LONDON (Reuters) - BT (BT.L) said on Wednesday it expected to meet its target of delivering more than 1 billion pounds of cost savings in the current financial year, and was aiming to increase free cash flow by more than a third.

Chairman Michael Rake told shareholders at the British telecoms carrier's AGM in London that the unacceptable performance of the group's Global Services unit had prompted substantial changes, and improving the division, which supplies IT services to multinationals, was a key priority.

"We believe that operational improvements in the business will generate sufficient cash flow to allow the dividend to grow at the same time as we invest in the business, reduce debt and support the pension scheme," he said.

Shares in BT were down 1.1 percent at 103.85 pence at 11:35 a.m. British time, underperforming the FTSE index of leading shares .FTSE, which was up 1.6 percent.

(Reporting by Paul Sandle, Editing by Victoria Bryan)