AI & 5G to Transform BT Group’s Future
BT Group, the UK’s leading broadband and mobile service provider, has unveiled an extensive workforce reduction plan that could cut as many as 55,000 positions, including employees and contractors, by 2030.
This potentially constitutes over 40% of its total workforce.
This move comes in the wake of the company’s aggressive transition into building a national fibre network and rolling out high-speed 5G mobile services.
CEO Philip Jansen is leading this strategic transformation, intended to modernise BT’s operations and adapt to new technologies like artificial intelligence. Jansen sees this restructuring as essential to BT’s future, stating, “New BT Group will be a leaner business with a brighter future.”
BT projects a significant decrease in its workforce size by the close of the decade, with current staff numbers of 130,000 anticipated to drop to a range between 75,000 and 90,000.
This reduction aligns with the completion of BT’s fibre roll-out, the digitisation of its services, adoption of AI, and the overall simplification of its structure.
Despite these changes, Jansen assured that customers would not “feel like they’re dealing with a robot,” highlighting BT’s commitment to maintaining its multichannel approach, online presence, and 450 stores.
Technology Adoption and Job Cuts
The plan to slash jobs isn’t unexpected, given BT’s ongoing fibre build and future plans to switch off 3G.
The Communications Workers Union (CWU) expressed the inevitability of the cuts in response to changes in infrastructure and technology, but stressed the need for BT to aim at retaining direct jobs and reduce contractors instead.
In line with recent patterns in the telecommunications sector, BT’s strategy mirrors that of Vodafone, which also revealed a global downsizing plan involving the elimination of 11,000 jobs to enhance its competitive edge.
As per Jansen, the adoption of digital networks and technologies like automation and AI would result in a reduced need for around 20,000 roles at BT.
Jansen acknowledged the “huge opportunities” to use AI, even going as far as likening the leap forward by generative AI large language models to the arrival of smartphones.
BT Group’s Financial Outlook
In BT’s annual financial results, there was an encouraging return to revenue and core earnings growth for the first time in six years, as of the end of March.
However, the cost of transformation and the impact on its free cash flow (FCF) overshadowed this achievement, sending its shares down 7% in morning trade.
While BT saw a 5% rise in adjusted core earnings after growth in networks and consumer businesses offset a decline in enterprise, FCF fell 5% due to increased cash capital expenditure.
Forecasts for free cash flow for 2024 were also lighter than analysts had expected.
Despite these financial headwinds, BT’s networks arm, Openreach, reaffirmed its commitment to reach 25 million premises with ultra-fast full-fibre connections by the end of 2026.
Furthermore, BT plans to invest the proceeds from the British government’s new tax expensing in its network build and on connecting customers to fibre.
While facing an “extraordinary macro-economic backdrop”, BT is determined to navigate this new terrain, with a focus on AI and digitisation at the core of its strategies.
As the telecoms sector undergoes a transformative phase, BT’s ambitious plans represent an attempt to stay ahead of the curve.
