Yahoo Finance BT Plans to Cut Up to 55,000 Jobs Following Fiber Rollout
(Bloomberg) -- BT Group Plc said it plans to cut its workforce by as many as 55,000 people by the end of the decade, after the UK’s biggest network operator completes its nationwide fiber-optic rollout.
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The company’s workforce will drop to 75,000 to 90,000 people by the fiscal year ending in March 2030 from about 130,000 currently, counting employees and contractors, the company said in its full-year earnings statement on Thursday. That’s a decline of about 42%.
Chief Executive Officer Philip Jansen is slashing costs at BT, fighting an industrywide slump as telecom carriers spend heavily on networks to keep up with surging data demand without a corresponding rise in revenues. On Tuesday, British rival Vodafone Group Plc announced plans to reduce headcount by 11,000 over the next three years. Jansen has pledged to cut expenses by £3 billion ($3.7 billion) a year by 2025 against 2020 levels, and has been weighing more dramatic job cuts since at least 2019.
Meanwhile, the company said its free cash flow is likely to decline to as low as £1 billion this fiscal year, with money going into building fiber and repaying government fiber grants. BT was vague about its earnings for the same period, saying they would grow without giving a specific number.
The shares fell 6.9% to 137.9 pence at 10:21 a.m. in London trading after earlier falling as much as 10%, the biggest intraday decline in six months. The company’s stock has gained 23% this year.
Shareholders were likely disappointed by cash-flow guidance and net-debt levels that were worse than expected, along with customer losses at its network division, Openreach, Berenberg analyst Carl Murdock-Smith said in a note on Thursday.
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BT posted adjusted fourth quarter earnings of £2.05 billion before interest, tax, depreciation and amortization. That compared to the £1.99 billion average forecast from analysts in a Bloomberg survey. The company hit a long-term target for full-year earnings of £7.9 billion that Jansen had originally set out in 2020.
What Bloomberg Intelligence Says:
BT’s consensus-matching fiscal 2023 results and plan to accelerate full-fiber investment from FY24 underscore the carrier’s solid execution against a strategy that aims to deliver sustainable sales and profit growth. An ambitious, but achievable, plan to cut the labor force (including third-party workers) by 30-42% over the midterm adds further clarity to the reiterated goal to add £1.5 billion (115%) to annual cash flow by the end of the decade.
— Matthew Bloxham, BI media and telecoms analyst
A BT spokesman said more than 15,000 roles would end after those employees had replaced its slower, copper-based network with more reliable fiber optics across 25 million homes by the end of 2026. At least 10,000 fewer people would be needed for running and maintaining that more efficient network, he said.
BT sees another 10,000 or more reductions coming from IT improvements and customer services efficiencies as those jobs become more automated, and 5,000 or so come from better organization, such as the combination of its Global and Enterprise divisions announced in December.
The Prospect union, which represents BT managers, expressed concern about the cuts and demanded an urgent meeting with Jansen following the announcement.
--With assistance from Henry Ren.
(Updates with analyst comment, a breakdown of the job losses starting in the sixth paragraph. A previous version of the story corrected the day of the week)
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