Light travels far faster than sound. That might explain why investors can quickly see through the latest plan announced by BT Group’s Philip Jansen.
BT will shed 55,000 jobs by 2030 or two-fifths of its workers, its chief executive said in Thursday’s full-year results. That sounds a big number. But cuts will derive mostly from completion of BT’s plans to connect 30mn premises with fibre broadband. Many are not full-time workers.
BT employs some 30,000 contractors today; most will no longer be needed after completion. Progress is good. Strong demand for faster data meant that almost 400,000 new customers signed up to higher priced fibre services. Average revenue per broadband customer grew by eight per cent as a result. Yet, shareholders might ask why group revenues rose just one per cent, especially given its contracts are inflation linked.
Blame cash-strapped consumers and competition. Other willing suppliers can meet the booming data demand. These factors eroded BT’s 21mn broadband customer base by 200,000 last year. That should jump to 400,000 this year, as some fibre customers switch off any redundant analogue services.
This transition means fewer staff in BT uniforms. Some 35,000 of the expected job losses will come not just from the lack of new projects but also from the lower maintenance needed on the new fibre network.
Worse, BT faces growing competition from “altnets” building out their own fibre. Upstarts such as Hyperoptic, CityFibre and toob have pursued a well funded land grab into BT’s copper wire territory. Some will surely fail but their assets are likely to be acquired cheaply by consolidators.
BT already expects to lose around 1.5mn lines by 2028. Double that and ebitda for that year could be 13 per cent lower than currently expected, thinks Numis. Any squeeze on operating cash flow would in turn threaten the dividend. The share price dropped 4 per cent on the day. Judging from that reaction the sound of Jansen’s plan did not appeal.
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