BT profits rise as job cuts and fibre focus fuel turnaround

BT has reported an increase in profits, with its latest financial results offering a glimpse of sustained revenue growth on the horizon. The telecoms giant announced a pre-tax profit of £1.3 billion for the year, an improvement from £1.2 billion in the previous period. Revenue, however, remained flat at roughly £20 billion, reflecting ongoing pressures within competitive markets.

The company’s turnaround strategy, led by Chief Executive Allison Kirkby, appears to be gaining traction. Since her appointment in early 2024, Kirkby has doubled down on BT’s position in the UK market through intensified cost-cutting and accelerated investment in full-fibre broadband. BT plans to expand its full-fibre reach to 25 million premises by the end of next year. Capital expenditure for the current year is expected to climb £100 million to meet this target, although normalised free cash flow of £1.5 billion remains on track and is projected to rise to £3 billion by the end of the decade.

Despite progress, headwinds remain significant. Competition from alternative network providers, or “altnets,” has intensified, with rivals leveraging lower prices to attract customers. During the fourth quarter, BT’s wholesale Openreach network lost 243,000 customers, a figure higher than the 208,000 lost in the previous quarter. Openreach’s performance is critical to BT’s future, as the division underpins much of its broadband market share.

To mitigate these pressures, BT is undertaking significant job cuts as part of Kirkby’s measured approach to streamline the company. Headcount has already fallen by 3 per cent to 116,000 employees, with plans to cut a total of 55,000 roles by the end of this decade. Many of these cuts will focus on the Openreach division as it nears completion of its fibre expansion and the automation of back-office operations.

The company is also streamlining its international operations, with Kirkby stating that BT is in active discussions to carve out its overseas business, which employs more than 8,000 staff. Its Italian division has already been sold, and talks are in progress about selling BT’s stake in its TNT Sports joint venture with Warner Bros Discovery.

Investor confidence has been bolstered by the broader strategy, with BT shares rising by 35 per cent since Kirkby’s appointment. The market has welcomed a renewed focus on the domestic market, underpinning optimism for sustainable cash flow growth amid new competition. While challenges such as customer retention and capital allocation remain front and centre, BT’s pledge to achieve a free cash flow target of £3 billion by the end of the decade continues to offer hope of a long-term revival.