LONDON: British telecommunications group BT announced on Thursday that it would cut up to 55,000 jobs by the end of the decade, marking the latest job cuts in the tech sector in response to rampant inflation.
The layoffs, affecting 42 per cent of BT’s workforce, come two days after UK mobile giant Vodafone announced plans to cut 11,000 jobs, or a tenth of its workforce, over three years.
“Both have struggled with inflationary pressures, especially in the energy sector,” he said Victoria scholarAnalyst at Interactive Investor.
BT employs 130,000 people, including contractors.
The group will reduce this number to 75,000 to 90,000 people in the next five to seven years, it said in a earnings release.
The grim news follows tens of thousands of jobs in the global tech sector being slashed this year, including by Facebook parent Meta, as rising inflation also weakens the global economy.
BT is making further cuts after already making cost-cutting plans three years ago.
“By the late 2020s, BT Group will be relying on a much smaller workforce and a significantly reduced cost base,” said the chief executive Philip Jansen.
The company is “in an exceptional macroeconomic environment,” he added.
The leaner group “will be a leaner company with a brighter future” and will “digitize the way we work and simplify our structure”.
BT said after rolling out its full fiber broadband and 5G network it would not need as many manpower to build and maintain.
The company also said on Thursday that net profit rose 50 percent to £1.9 billion ($2.4 billion) for the year ended March, but the performance was distorted by a one-off tax credit.
Pre-tax profit fell 12 percent year-on-year to £1.7 billion, while revenue fell 1 percent to £20.7 billion.
Investors fled after reports of sharp cuts.
BT’s share price fell nearly 9 percent in early morning trading in the rising London stock market.
The price later stood at 138.95 pence, down 6.2 percent from Tuesday’s close.
“Headlines will no doubt focus on job cuts,” noted the Hargreaves Lansdown analyst Matt Britzman.
“It’s drastic, but given the rising costs and low margins in the overall business, it’s not too surprising.”
As part of an ongoing restructuring, the company announced a merger of its pay-TV broadcaster BT Sport last year.
BT and Warner Bros. Discovery agreed to combine televised sports offerings in the UK and Ireland.
The new joint venture, combining the assets of BT Sport and Eurosport UK, will launch later this year under the name TNT Sports.
The move marks the end of the BT Sport brand, which launched ten years ago and offers costly coverage of English Premier League football.
“The consolidation has the potential to create synergies,” noted Scholar.
Britzman said BT may seek a payout.
“Perhaps the more important objective will be the gradual divestiture of BT’s 50 per cent interest in the joint venture; Warner Bros. has an opportunity to buy part of BT’s interest in the first four years,” he told AFP.
The layoffs, affecting 42 per cent of BT’s workforce, come two days after UK mobile giant Vodafone announced plans to cut 11,000 jobs, or a tenth of its workforce, over three years.
“Both have struggled with inflationary pressures, especially in the energy sector,” he said Victoria scholarAnalyst at Interactive Investor.
BT employs 130,000 people, including contractors.
The group will reduce this number to 75,000 to 90,000 people in the next five to seven years, it said in a earnings release.
The grim news follows tens of thousands of jobs in the global tech sector being slashed this year, including by Facebook parent Meta, as rising inflation also weakens the global economy.
BT is making further cuts after already making cost-cutting plans three years ago.
“By the late 2020s, BT Group will be relying on a much smaller workforce and a significantly reduced cost base,” said the chief executive Philip Jansen.
The company is “in an exceptional macroeconomic environment,” he added.
The leaner group “will be a leaner company with a brighter future” and will “digitize the way we work and simplify our structure”.
BT said after rolling out its full fiber broadband and 5G network it would not need as many manpower to build and maintain.
The company also said on Thursday that net profit rose 50 percent to £1.9 billion ($2.4 billion) for the year ended March, but the performance was distorted by a one-off tax credit.
Pre-tax profit fell 12 percent year-on-year to £1.7 billion, while revenue fell 1 percent to £20.7 billion.
Investors fled after reports of sharp cuts.
BT’s share price fell nearly 9 percent in early morning trading in the rising London stock market.
The price later stood at 138.95 pence, down 6.2 percent from Tuesday’s close.
“Headlines will no doubt focus on job cuts,” noted the Hargreaves Lansdown analyst Matt Britzman.
“It’s drastic, but given the rising costs and low margins in the overall business, it’s not too surprising.”
As part of an ongoing restructuring, the company announced a merger of its pay-TV broadcaster BT Sport last year.
BT and Warner Bros. Discovery agreed to combine televised sports offerings in the UK and Ireland.
The new joint venture, combining the assets of BT Sport and Eurosport UK, will launch later this year under the name TNT Sports.
The move marks the end of the BT Sport brand, which launched ten years ago and offers costly coverage of English Premier League football.
“The consolidation has the potential to create synergies,” noted Scholar.
Britzman said BT may seek a payout.
“Perhaps the more important objective will be the gradual divestiture of BT’s 50 per cent interest in the joint venture; Warner Bros. has an opportunity to buy part of BT’s interest in the first four years,” he told AFP.
