BT Plans to Cut up to 6,600 Jobs – Report

BT is reportedly due to announce up to 6,600 job cuts when it reports annual results next week as it tries to boost profitability in the face of growing competitive and regulatory challenges.

The plans were reported in the UK's Financial Times newspaper (subscription required), which cites people with inside knowledge as the source of the information. BT Group plc (NYSE: BT; London: BTA) said it was "declining to comment" on the story when approached by Light Reading.

BT's share price was trading up nearly 1% in London this morning following the news.

Cuts of that magnitude would equal about 6% of BT's workforce at the end of March 2017, when it had around 106,400 employees. However, that number is likely to have fallen since then because BT announced plans for about 4,000 redundancies a year ago.

BT's workforce has swelled in recent years, rising from just 88,500 employees in March 2015. The company bought EE, the UK's largest mobile operator, in a £12.5 billion ($17 billion, at today's exchange rate) takeover in early 2016.

Thanks to the mobile revenues that EE brought, BT's per-employee revenues soared to about £226,500 ($307,000) in its fiscal year ending March 2017, from £185,400 ($251,300) a year earlier.

But the company was forced to cut its financial targets last year after revelations of an accounting scandal at the Italian part of its global services division. It blamed its weaker outlook partly on gloomy conditions in some of its public sector and enterprise markets. (See BT's Patterson Feels Italian Heat.)

Then, in April, BT said it would merge the division serving public sector and business customers with its wholesale and ventures arm. (See BT Merges Business & Wholesale Arms, Hints at Future Layoffs.)

Asked at the time if that move would lead to job cuts, a BT spokesperson told Light Reading: "We're not announcing any headcount reductions at this time. What we can say is that we will look to eliminate duplication and introduce efficiencies over time."

The 4,000 job cuts that BT announced in May 2017 would affect global services as well as various back-office operations, said the operator. In July, it embarked on further restructuring when it unveiled plans to merge its consumer business with EE, which had previously been kept separate, and Plusnet, a budget broadband division. (See BT Cuts 4% of Jobs, Plans Global Services Overhaul and BT Rejigs Consumer Biz as Profits Hit by £225M Italy Payout.)

BT has invested heavily in sports rights to entice TV customers, but it lost 5,000 TV customers in its recent third quarter and reported the first sales decline at the consumer business since 2013. (See BT Consumer Biz Hits Buffers as Q3 Results Disappoint.)

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New challenges have also emerged in the broadband market, with wholesale customer Vodafone UK turning to CityFibre for the construction of a high-speed all-fiber network that will provide an alternative to BT and cable giant Virgin Media Inc. (Nasdaq: VMED). (See CityFibre to Raise £200M, Ramp Up FTTH Challenge to BT.)

Analysts at Exane BNP Paribas told the Financial Times that BT could slash about 6,600 jobs to save £500 million ($678 million) over the next three years. Morgan Stanley thinks about 6,500 staff will go, according to the same FT report.

It is not all one-way traffic, though. BT's Openreach division, which was legally separated from the rest of the BT business last year, has announced plans to hire another 3,000 engineers for the rollout of higher-speed network infrastructure. (See Only BT's Dismemberment Will Sate Rivals.)

News of the BT cuts emerged in the same week that Virgin said it would cut 500 call center jobs as it digitizes operations, according to the Telegraph and other media reports.

Over the in the US, meanwhile, CenturyLink Inc. (NYSE: CTL) this week said it would cut more than 1,000 jobs, or 2% of total positions, following a merger with Level 3 and as it automates operations. (See Automation, M&A Lead to 1,000+ Job Losses at CenturyLink.)

The use of chatbots in customer services departments, and artificial intelligence in network operations, threatens to claim tens of thousands of jobs across the industry in the next decade. (See Chatbot Takes Charge: Vodafone's Customer Services Overhaul and The Trendiest Telcos Don't Wear SOCs.)

— Iain Morris, International Editor, Light Reading

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