BT’s chief executive promised to “build with fury” despite the fact that it has invested £15 billion to bring full-fibre internet to 25 million premises before 2026.
Philip Jansen, the CEO of Britain’s largest telecoms company, announced yesterday that the group had achieved 41 percent of its goal. He then looked to the future and revealed plans to reduce the workforce of the company by up to 42 percent before the end the decade.
The prospect of job losses of between 40,000 to 55,000 could stoke anger among the unionised employees who have built the faster, more reliable broadband network in the last five years.
John Ferrett said that the union, Prospect, which represents BT’s managers, was “deeply worried by the magnitude of these cuts”, and demanded a meet-up with Jansen.
Ferrett stated that “announcing such a massive reduction in this manner will be very unsettling to workers who have done so much to keep our country connected during the Pandemic.” “We have never supported compulsory redundancies at BT, and we have managed to ensure that over the years any reductions were achieved on a voluntarily basis.”
A spokesman from the Communication Workers Union who recently reached an agreement with Royal Mail after a long-running industrial dispute said: “The introduction and completion of fibre infrastructure replacing the copper network was always going reduce labour costs in the future for the company.”
We have categorically stated to BT, however, that we would like to retain as many direct jobs as we can and that any job reductions should be due to subcontractors and natural attrition.
BT was a former state monopoly privatised by Margaret Thatcher in 1984. Its services include EE mobile, Openreach Broadband and the joint venture BT Sport. About 130,000 employees, including 30,000 contractors, work for the FTSE 100. The majority of the job cuts will be made in the UK.
Jansen is a former Worldpay chief executive who has led BT since 2019. He has been a driving factor behind the full-fibre government-supported project. It has been hailed by politicians and bosses alike as being important for the “leveling up” agenda, and powering the digital economy.
BT’s updated full-year financial results reveal that the company has built 10.3 million premises, or 41% of its 25-million-premises target. This includes 702,000 premises in its fourth quarter, at an average rate of 54,000 a weekly. The demand for full-fibre was described as “extremely high” by BT, with orders up 70% year-on year and the take-up increasing to 30.4%.
Jansen stated that BT’s balance sheet will be boosted by the completion of the construction. BT’s decision to reduce its full-fibre construction will result in the loss of 15,000 jobs.
Jansen stated that the new networks are also easier to maintain and fix than BT’s older copper-based network and would therefore require around 10,000 fewer jobs. Another 10,000 jobs will be eliminated through increased automation and digitalisation of new technologies such as AI.
Jansen, who predicted artificial intelligence will be “as important as the Internet and mobile phones”, is the latest to say that regulation needs to be tightened.
“Generative AI represents a major leap forward. It’s true that there are risks, and we need to be careful. But it will be just as important as the Internet and mobile phones. “This is a huge change, but will take some time”, he said.
The positive side of it is that there will be new applications, services, innovations, products, and new jobs that will arise as a result.
BT announced its current strategy in December, which includes restructuring and combining the enterprise unit with global business, creating a new division named BT Business. The company announced in December that it would save around £100 million per year through this restructuring, which includes combining its enterprise unit with its global business to create a new division called BT Business.
Jansen explained that the job losses, which include roles such as engineers and customer service, will be caused by a reduction in contractors, “natural turnover and reskilling”. Jansen said the job cuts, which include engineers and customer service, would come from employing fewer contractors, “natural attrition and re-skilling”.
Vodafone will cut about 12 percent of its 90 000 global employees, including London, Newbury and overseas.
Despite the promise that future costs will be lower, BT shares fell 5 percent, or 7 1/2p to 140 3/4p at the London Stock Exchange.
Free cash flow (FCF), which is BT’s measure of its financial performance, fell to £1.3bn for the year ended March. This was at the lower end BT’s range of guidance. It is expected that the new financial year will see free cash flows of £1.1bn to £1.2bn.
Barclays analysts said that they expect a negative reaction to the lower FCF. The company explained that the lower cash flow was due to BT’s investment of the gains made from the capital allowances announced by the government at the budget.
Openreach’s growth was more than offset by the declines in other units. Profit before tax dropped 12 percent to £1.7 billion.