BT to slash workforce by up to 42% by 2030
End of full-fibre rollout and adoption of AI named as contributing factors
BT Group, the largest network operator in the UK, plans to reduce its workforce by 40,000 to 55,000 employees by the end of the decade.
The move comes as the company finalises its nationwide fibre-optic deployment and adapts emerging technologies like AI.
The upcoming layoffs at BT Group will affect both direct BT employees and third-party contractors, resulting in a reduction of 31% - 42% in the company's overall staffing.
The Group currently employs 130,000 people, including third-party contractors. Following the dismissals, the workforce will be scaled down to a range of 75,000 to 90,000 individuals.
CEO Philip Jansen has been reducing headcount as part of his efforts to increase profitability in recent years. The aim is to achieve annual savings of £3 billion by the end of 2025, compared to the company's cost base in 2020.
So far BT says it has successfully attained £2.1 billion in cost savings out of its £3 billion target.
Jansen says the "new" BT Group will undergo a transformation into "a leaner business" as a result of the cuts. A considerable portion of the upcoming dismissals will stem from the completion of the full-fibre rollout, which the Group has invested a substantial amount of money in.
BT is currently upgrading its national network from copper-based connections to fibre connections, with the goal of making this infrastructure accessible to 25 million households by the end of 2026.
Once this upgrade is complete and internal systems have been enhanced, the need for a large number of engineers and technicians will decrease.
"This is an existing plan, we're just announcing it and giving people a flavour of the landing zone in five to seven years' time," Jansen said.
A source familiar with the job cut plan told the FT that approximately 30,000 of the positions slated for elimination will belong to third-party contractors. The reduction will involve 15,000 fibre engineers and 10,000 maintenance workers.
Additionally, approximately 10,000 roles will be eliminated through the implementation of increased digitisation and automation throughout BT.
"Whenever you get new technologies you can get big changes," Jansen said of the roles that would be lost as a result of automation and digitisation.
"Generative AI . . . gives us confidence we can go even further."
BT's decision to intensify its cost-cutting efforts coincides with the release of a mixed set of annual results on Thursday.
The company's financial performance showed a combination of positive and negative outcomes.
BT's annual results for the year ending in March demonstrated a 5% annual increase in adjusted core earnings, reaching £7.9 billion, in line with market expectations. This growth was primarily driven by positive performance in the Openreach network division and consumer businesses, which offset a decline in the enterprise sector.
However, the company also experienced a 5% decrease in free cash flow, amounting to £1.3 billion. That was at the lower end of its guidance and was attributed to higher cash capital expenditure.
BT's pre-tax profit reached £1.73 billion, representing a 12% decline.
The forecasts for free cash flow in 2024 fell below analysts' expectations, indicating a more conservative outlook in that regard.
On a more positive financial note, BT expects to be a significant beneficiary of the UK government's full expensing scheme during the financial years 2024-26. As a result, the company foresees paying no UK cash tax over the next three years, which is expected to provide a favourable impact on its financial position.