BT Customers to Face Bill Increases as Telecom Giant Implements Cost-Cutting Measures
Telecoms giant BT has recently announced that customers with BT accounts should expect an increase in their bills. The company is preparing to make significant cost savings and is considering raising prices in response to additional financial burdens. Chief Executive Allison Kirkby revealed that BT is anticipating an extra cost of around £100 million, mainly due to the government’s decision to raise employers’ National Insurance contributions. This move is expected to put pressure on BT’s finances, prompting the company to explore price adjustments to mitigate the impact.
Kirkby stated that BT will intensify its efforts to reduce costs quickly and efficiently to counteract the impending financial strain. The company is focusing on implementing cost-cutting strategies, including reviewing customer prices, identifying supply chain savings, and leveraging artificial intelligence and automation to enhance productivity. However, Kirkby reassured that BT does not intend to further reduce its workforce under its existing cost-cutting programme, which aims to eliminate up to 55,000 jobs globally by 2030. This decision aligns BT with other major companies like Sainsbury’s, Marks & Spencer, and Primark, all grappling with increased costs due to the employer NI changes.
The announcement coincided with BT revising its annual sales outlook downwards and confirming that another 2,000 jobs have been cut as part of its ongoing cost reduction plan. The company reported a 10% decrease in pre-tax profits to £967 million for the six months ending September 30, with revenues declining by 3% to £10.1 billion amidst a competitive retail environment. Shares in BT dropped by 6% following the news, as the company projected a 1% to 2% annual revenue decrease, attributing it to trading challenges outside the UK and lower sales of less profitable products, particularly in the corporate and public sectors. Despite the revenue decline, BT maintained its underlying earnings guidance at around £8.2 billion.
BT accelerated its job reduction initiative, reducing its workforce by over 2,000 employees year-on-year to 118,000 and saving £433 million in annual costs during the first half of the year. Kirkby also mentioned the potential sale or restructuring of BT’s international division, with discussions ongoing to optimize the business. As part of her efforts to revive the struggling company and expand its full-fibre broadband network across the UK, Kirkby announced further cost-saving measures amounting to £3 billion over the coming years.
The company’s commitment to achieving £3 billion in annual savings ahead of schedule underscores its determination to streamline operations and enhance efficiency. BT’s long-term plan aims to reduce the workforce to between 75,000 and 90,000 employees by 2030 and deliver substantial cost reductions. Kirkby’s proactive approach and strategic vision are central to BT’s transformation journey as it navigates operational challenges and economic uncertainties in the telecommunications sector.
In conclusion, BT customers should brace themselves for upcoming bill increases, as the company adapts to external financial pressures and strives to maintain competitiveness in a dynamic market landscape. As BT continues its cost-cutting initiatives and explores innovative solutions to bolster its financial position, stakeholders will closely monitor the company’s progress and strategic decisions in the ever-evolving telecommunications industry.