- To cut off the posts after the fiber build-up has finished
- Free cash flow comes at the bottom of guidance
- Meets annual core earnings growth expectations
- stocks down 7%
LONDON (Reuters) – BT Group (BT.L), Britain’s largest provider of broadband and mobile services, will cut up to 55,000 jobs including contractors by 2030 – potentially more than 40% of its workforce – with Complete them for spreading the fibers. And it adapts to new technologies such as artificial intelligence.
The company is working through a transformation plan to build a national fiber network under the direction of its chairman, Philip Jansen, as well as roll out high-speed 5G mobile services.
On Thursday, the former state monopoly reported growth in pro forma revenue and core earnings for the first time in six years in the year ending at the end of March, but the cost of turning the business around and hurting free cash flow took a toll, sending its shares down 7% in morning trading.
Jansen said that after completing the rollout of fiber, digitizing the way it operates, adopting artificial intelligence (AI) and simplifying its structure, BT will rely on a much smaller workforce and significantly reduced cost base by the end of 2020.
“The new BT range will be a smaller business with a brighter future,” he said.
She added that the total number of employees in the group will decrease from 130,000 to between 75,000 and 90,000 by its fiscal year 2030 at the latest. About 30,000 of its current employees are contractors.
Janssen said BT’s ongoing job cuts will accelerate as it completes its fiber construction and shuts down its 3G network.
“It’s a rolling program (of cuts), but it’s a five- to seven-year landing zone,” he told reporters.
The Communications Workers Union (CWU) said the job cuts were “not surprising” given the upcoming changes in infrastructure and technology. Talks between BT and the CWU were necessary to ensure a smooth transition on that front, adding that BT should aim to preserve direct jobs and cut contractors.
Rival Vodafone to BT Corp (VOD.L) said on Tuesday it would cut 11,000 jobs worldwide to try to restore its competitive edge.
Jansen said about 10,000 fewer network engineers are needed to run digital networks, while technologies such as automation and artificial intelligence will replace another 10,000.
There are “enormous opportunities” for using AI, he said, adding that large language models for AI would be a leap forward rivaling the arrival of the smartphone.
He said BT will use artificial intelligence to provide better customer service, driven by customer needs, as well as seize other business opportunities.
“We’re not going to be in a situation where people feel like they’re dealing with a robot,” he said. “We have multiple channels, we’re online, we have 450 stores, and that doesn’t plan to change.”
cash flow investment
In terms of full-year results, Jansen said BT made good progress while navigating an “extraordinary macroeconomic backdrop.”
It met market expectations with a 5% increase in adjusted underlying profit of £7.9 billion ($10 billion) after growth in networking and consumer businesses offset a decline in comps.
But free cash flow fell 5% to 1.3 billion pounds, at the lower end of its guidance, due to increased cash capital spending. Free cash flow forecasts for 2024 were also lower than analysts expected.
Chief Financial Officer Simon Lowth said BT would invest the proceeds from the UK government’s new tax expenditures into building its network and connecting customers with fiber optics.
He said that would result in free cash flow of between 1.0 and 1.2 billion pounds this year, which is lower than market expectations of 1.22 billion pounds.
Openreach, the networking arm of the group, has reaffirmed its goal to reach 25 million buildings with ultra-fast, full-fiber connections by the end of 2026.
It has invested heavily to build its fiber network faster than rival Virgin Media’s O2 and smaller alternative networks.
BT said it expects both revenue and underlying earnings to grow on a pro forma basis this year.
($1 = 0.7923 pounds)
(Reporting by Paul Sandel). Editing by James Davey
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