The British telecom group BT Group is planning radical job cuts.
(Photo: Bloomberg)
London The British telecommunications group BT Group wants to reduce its costs with drastic job cuts and use the efficiency advantages of new technologies such as artificial intelligence (AI). According to the company, between 40,000 and 55,000 jobs will be lost in its own group and at subcontractors by 2030. In extreme cases, that would be more than 40 percent of the approximately 130,000 employees worldwide.
About a fifth of the jobs are to be replaced by new technologies such as AI. “Whenever new technologies appear, there can be major changes,” said BT CEO Philip Jansen, explaining the job cuts through digitization and automation.
“Generative AI gives us the confidence that we can go further,” announced the BT boss. “We will be a big beneficiary of AI. I believe that generative AI is a huge leap forward; yes we have to be careful but it is a massive change.”
The telecom group has been trying to reduce its costs for years. In November, BT raised its annual savings target from £2.5 billion to £3 billion by 2025. Of this, £2.1 billion is said to have already been achieved compared to the 2020 cost base.
“By continuing to scale and connect heavily, digitalize the way we work and simplify our structure, BT Group will be operating with a much smaller workforce and a significantly reduced cost base in the late 2020s,” announced Jansen. The new BT Group will be a “leaner company with a promising future”. Of the 130,000 employees worldwide, around 80,000 work in the UK and 30,000 at subcontractors.
When the expansion of the fiber optic network in Great Britain is completed, significantly fewer employees will be needed.
(Photo: dpa)
Like other telecommunications providers, BT is investing heavily in the roll-out of fibre-optic networks and fifth-generation (5G) mobile networks. By 2026, the old copper lines in 25 million households in Great Britain are to be replaced by high-speed data networks.
However, BT management believes that the most labour-intensive part of this investment program will be completed by the end of the decade, when significantly fewer employees will be required. “If we stop expanding the network, we will no longer need these workers,” said Jansen. Around 15,000 jobs for fiber optic technicians and 10,000 jobs for maintenance staff are to be cut. At the same time, new technologies such as AI in the service area help to automate activities such as network maintenance.
Unions in the UK were shocked by the massive job cuts: “The announcement of such a cut will be very unsettling for workers who have done so much to keep the country connected during the pandemic,” warned John Ferrett of the workers’ organization Prospect. The Communications Workers Union (CWU) was not surprised by the job cuts, but insists that the downsizing will be carried out primarily at subcontractors and through natural turnover.
Stock market reacts disappointed to the annual result
The fact that the stock market initially reacted negatively to the announcements with a price loss of more than eight percent is probably mainly due to the fact that investors had hoped for better annual results for the financial year that ended on March 31st. Adjusted profit before tax for the past financial year rose by around five percent to £7.9 billion thanks to price increases. A target that Jansen actually wanted to achieve in 2020.
However, the group’s revenue fell slightly by one percent to £20.7 billion. However, BT’s main underperforming factor was free cash flow, which fell five percent to £1.3 billion. The reason for this is higher investments than originally planned. For the new financial year, BT is also falling short of analysts’ expectations with a budgeted cash flow of between £1.1 billion and £1.2 billion.
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