BT’s first female boss has the best day since the dotcom boom

BT’s first female boss, who pledged to reduce costs by £3bn and heavy investments in broadband upgrades, led the company to its best day since the dotcom bubble.

Allison Kirkby who became the new chief executive officer of the former state-monopoly in February has promised to save more money by the year 2029, after the company had already achieved its previous goal.

She said that BT has reached an “inflection” point as it crests its multi-billion-pound spending annually on its new full fibre broadband network. The investment, estimated to be £15bn, has put a heavy burden on BT’s shares. They have been trading at pandemic levels in recent weeks.

The shares soared up to 18pc after Ms Kirkby announced her first full-year results, including a dividend increase, on Thursday. This was the largest intra-day increase since the peak of the dotcom boom in 2000.

Short sellers were hurt by the upswing, as they had placed large bets on BT. They believed that Ms Kirkby would struggle to overcome a malaise within its business divisions.

Earlier this year, it was revealed that several major investors including the hedge funds AKO Capital, Kintbury Capital, Canada Pension Plan Investment Board, and BlackRock Investment Management had placed a record £300m into positions to profit from BT’s stock price falling.

Ms Kirkby is a Glaswegian of 56 years old who joined the telecoms industry after working for Procter & Gamble for 20 years. She has plans to double cash flow at the company to £3bn before the end the decade. She also wants to increase the payout per share to shareholders to 8p by 3.9pc. Patrick Drahi, a French tycoon with a stake in the company of nearly 25pc, is its largest shareholder.

She announced a new attempt to sell or revive its former Global Services international corporate business via partnership. Her predecessor Philip Jansen tried unsuccessfully to sell the declining business to private investors.

Ms Kirkby stated: “We’re sharpening our focus in order to better serve our customers and our country. We are accelerating modernisation of operations and exploring options to optimize our global business.

This will result in a simpler BT Group that is fully focused on connecting UK and well positioned for significant growth.

Closer to home BT has already outlined its plans to eliminate 55,000 jobs before the end of this decade. Around a fifth will be replaced by artificial intelligent.

The company also plans to reduce costs by closing down its copper phone network and simplifying the system in general.

Karen Egan, Enders Analysis, labelled Mr Kirkby’s initial moves as “very confident”. She added that they “clearly were designed to send home the message that expensive fibre spending is only a temporary phenomena”.

The FTSE 100 firm reported a 31pc decline in profits before tax to £1.2bn for the year ending March.

The group’s struggling businesses division and the rising interest rates had a major impact on the slump.

BT announced that it has accelerated the rollout for full-fibre internet, passing another 1 million premises in the last three months, bringing the total footprint up to over 14m. Initial construction is underway on a 6th. The company aims to reach 25 million homes by 2026.

It lost 491,000 broadband subscribers due to the growing competition of so-called “alt Net” rivals. The bosses also blamed the lacklustre housing market and the cost-of-living crisis.

BT’s consumer division, which includes EE Mobile, reported a 1pc increase in revenue thanks to recent price increases.

Openreach, the group’s broadband division, saw revenues rise 7pc thanks to increased prices and continued network expansion.

BT Business revenues fell by 2pc as a result of declines in legacy contracts and products. The overall revenue increased by 1pc, to £20.8bn.