BT blames 18% fall in profits on need for additional savings after large increase in energy bills and soaring inflation
BT has warned of further job cuts after it was forced to find an additional £500m in additional savings due to rapidly rising inflation and energy bills. The telecoms giant, which has reported an 18% slump on pre-tax profits from £1bn to £831m year-on-year in the six months to the end of September, has stated that its energy bill will be £200m higher this year. The company’s last official plan for job cuts under previous CEO Gavin Patterson, saw 13,000 jobs cut over three years from 2018.
As a result, BT has said that it has been forced to raise its cost-savings target from £2.5bn to £3bn by the end of its financial year in 2025, in response to inflation hitting a 40-year high and the surge in energy costs.
As reported in The Guardian, “We are leaving no stone unturned to make sure BT can be the most-efficient organisation it can be,” said Philip Jansen, the chief executive at BT.
“Inevitably it means some jobs will not exist in the future but that has been true of the last few years too. We will use natural attrition as much as we can. In these difficult conditions we know we have to double down on our costs. There are no specific numbers in mind. This [cost-cutting programme] is up until the end of 2025. Everyone has to share the pain – all 100,000 people at BT – to get to this £3bn on cost savings.”
Jansen also reiterated plans to push-through higher than inflation price rises, which could see bills rise by 14% for customers, a move which has seen BT and other operators criticised, as Ofcom has indicated that nearly 8 million households have experienced difficulty paying their bills, having told operators to “think hard” about making further price hikes in the current climate.
BT indicated that the slump was due to higher costs across its business as well as costs incurred in the £15bn rollout of next-gen full-fibre broadband across the UK. BT, which has been hit by ongoing strike action by tens of thousands of its near 60,000 frontline workforce, said that the industrial action had affected the rollout of broadband to new customers, with 40,000 homes missing out on new connections due to the strike action.
Openreach, BT’s broadband network subsidiary, has also stated that its customer base fell by 89,000 in the company’s second quarter compared with a 29,000 increase in the same period last year.
With strike action set to continue, and energy prices likely to remain high, BT’s difficult year looks set to continue into the next.