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BT axing 13,000 staff; TV subs decline

May 10, 2018

BT is preparing to cut 13,000 staff over the next three years and move out of its London HQ after nearly 150 years, as it seeks to cut £1.5 billion (1.71bn) in costs after a difficult 18 months.

The latest job cuts and restructuring come as the company delivered a 3 per cent drop in Q4 revenue to £5.96 billion and 1 per cent for the year to £23.7 billion. Q4 core earnings rose 1 per cent to £2 billion.

The UK’s dominant telco said the job losses would come mainly from back office and middle-management roles. About two-thirds of the job cuts will fall on its UK workforce of about 80,000, with the remainder coming from the 18,000 staff it employs internationally.

“This is probably the most significant transformation we have made in the last 10 years,” said Gavin Patterson, BT CEO. “We need to do this to be competitive in the future. If we are compared with our peers we are frankly too complex and overweight. While I recognise the pain, ultimately it is the right thing to do for the business.”

BT said the move out of its London HQ in St Paul’s formed part of a plan to cut the number of locations it owns across the UK. Patterson said that arounf 80 per cent of its staff were based in around 50 offices across the UK. That number will be cut to 30 “modern, strategic sites to create a more collaborative, open and customer-focused working culture”.

“In many cities we have multiple offices, it is about consolidating in key towns,” said Patterson. “We will certainly have a headquarters in London; this is not BT moving out of London. It is more likely to be in a smaller, future-oriented working environment.”

BT TV was present in 1.74 million homes at the end of Q4, down 16,000 on the previous quarter. BT Sport, however, continued to pull in audiences, with viewing figures up 19 per cent year on year. The company recently maintained its Premier League rights – a jewel in the crown for any broadcaster – for another 3 seasons.

BT Openreach added 100,000 new connections in the quarter to take the broadband line base to 20.7 million lines and some 555,000 new fibre additions. The company is targetting 3 million FTTP premises by the end of 2020

Offering his thoughts on the results, Paolo Pescatore, VP Multiplay and Media at CCS Insight, commented: “These latest announcements underline the ongoing challenges the BT group faces. The need for further cost reduction will hamper its ability to grow in key areas; in particular BT Sport. Move to convergence cannot come soon enough and arguably should have been moved sooner.”

“Naturally, all attention now focuses on the Consumer business ahead of next week’s announcement. Worrying times for the consumer unit with another quarter of line and TV losses. Marc Allera has a lot to ponder and faces some tough decisions with the integration of the consumer units. His strive for simplicity and customer friendly approach will put the new entity in good stead. However, he now needs to take a broader role beyond mobile and individual consumers and more about household telecom requirements.”

“It’s been a while since BT acquired EE and we’ve yet to see significant benefits from the deal given the ongoing challenges facing the overall group. With this in mind it is unsurprising that some of the successful executives at EE have now secured key roles as part of the new entity. Marc being one as well as Gerry McQuade. EE has been a wonderful asset in its own right and BT needs to do a better job of leveraging this business. It almost feels like a reverse takeover.”

“We do not expect major changes overnight. However, changes need to be made across the board with a clear focus on putting the customer at the heart of everything. There is no question that BT has the network assets to play a key role. And it could be well positioned to act as an aggregator of content. The BT Sport service still remains hugely successful which BT must leverage across its brands. Furthermore it must continue in driving innovation as a way of standing out in a crowded and cut throat market.”

“The new organisation structure and strategy cannot come soon enough. However, in reality it will be some time before this comes into effect and lot can happen given recent developments.”

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