BT Group, the largest broadband and mobile provider in the UK, has announced plans to reduce its workforce by up to 55,000 jobs, including contractors, by 2030.
This represents a potential reduction of over 40% of its current workforce as the company completes its fiber roll-out and adjusts to emerging technologies like artificial intelligence (AI).
Under the leadership of CEO Philip Jansen, BT has been executing a transformation plan to build a national fiber network while also deploying high-speed 5G mobile services. The company recently reported pro-forma revenue and core earnings growth for the first time in six years, achieved by investing in network and consumer businesses.
However, the cost of the business transformation, coupled with the impact on free cash flow, has taken a toll on the company's performance, leading to an initial 8% decline in its share price. Jansen stated that once the fiber roll-out is completed and the company digitizes its operations, adopts AI, and simplifies its structure, BT will operate with a significantly smaller workforce and reduced costs by the end of the 2020s.
BT anticipates reducing its total number of workers from 130,000 to between 75,000 and 90,000 by its 2030 financial year. Currently, 30,000 of its employees are contractors. By this time, the majority of the full-fiber network build will be finished.
While BT's adjusted core earnings saw a 5% increase to £7.9 billion, meeting market expectations, its free cash flow declined by 5% to £1.3 billion, at the lower end of its guidance, due to higher cash capital expenditure. Forecasts for free cash flow in 2024 also fell below analyst expectations.
Barclays has predicted a negative impact on BT's share price due to the lower free cash flow. However, BT's networks division, Openreach, remains committed to its goal of providing ultrafast full-fiber connections to 25 million premises by the end of 2026. The company expects both revenue and core earnings to grow on a pro forma basis in the current year. Photo by Gryffindor, Wikimedia commons.