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BT CEO ups cost-cutting plan amid rising inflation and soaring energy costs
National telecom giant admits strike action is impacting customer broadband connections
BT Group is looking to wrench out higher savings amid rising inflation in the relentless pursuit of improved profits.
Britain's former state-owned telecommunication biz today outlined results for the six months ended September 30, with revenue up 1 percent year-on-year to £10.4 billion ($11.6 billion) due to growth in Consumer and Openreach. Operating profit for the half-year was up 58 percent to £594 million ($666 million).
CEO Philip Jansen said the company "remains on the front foot in these turbulent times" and that he is "laser focused on modernizing and simplifying BT Group."
"Given the high inflationary environment, including significantly increased energy prices, we need to take additional action on our costs to maintain the cash flow needed to support our network investments," he added.
With this in mind, Jansen is upping cost savings targets "from £2.5 billion to £3 billion by the end of FY25." BT embarked on a cost-cutting process in May 2018 when previous boss Gavin Patterson launched the plan to layoff 13,000 employees and chopped 90 percent of its real estate. The company reached its target of £1 billion gross savings well ahead of target.
The energy crisis in Europe is leading to price rises across the board, and BT said energy overheads went up by £200 million ($224 million) year-on-year.
The Consumer business was up 3 percent to £4.992 billion ($5.597 billion), and Openreach grew by 5 percent to £2.836 billion ($3.179 billion). The Enterprise and Global divisions both reported declining fortunes.
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In other highlights, BT said the weekly build rate for FTTP connections was 62,000 in the past three months with more than 8.8 million premises hooked up.
BT also reported that Openreach customer connections were impacted by industrial action to the tune of 40,000, indicating that contrary to BT's own claims, the strike by 21,000 engineers is taking a toll.
As Reg readers know, some 26,000 BT Group staff – also including around 5,000 call center operators – downed tool for eight days in July, August, and October. The dispute revolves around a pay award of £1,500 to BT staff in April, made without consulting the Communication Workers Union (CWU).
The CWU complained the pay rises for 58,000 frontline BT workers was way below inflation, leaving them nursing a pay cut in real terms. BT said it was the highest award given to staff in years, and comes while it is shouldering the cost of rolling out FTTP.
The last strike date was on October 24 and the union talked of possibly running a fresh ballot to see if more BT employees wanted to join.
The CWU previously highlighted that BT boss Jansen was awarded a 30 percent-plus pay hike in April, taking his package to more than £3 million. ®