BT struggles as revenue drop leads to job cuts
- BT faced a challenging market with a 3% decline in revenues, reaching £5.2 billion in its third quarter.
- Thousands of jobs are being cut as part of a wider strategy to reduce costs, aiming for a total reduction of 55,000 by 2030.
- Despite the financial downturn, BT's pre-tax profits saw a slight increase, but this did not prevent a fall in share prices.
In January 2025, the UK telecoms giant BT announced that it was experiencing significant pressure on its revenues attributed to weaker phone sales. In its third-quarter report, which covers the period until the end of December 2024, BT noted a 3% revenue decline, amounting to £5.2 billion. This downturn was primarily caused by challenging market conditions outside the UK and sluggish sales of handsets. While price increases and expansion of the ultra-fast broadband network offered some relief, they were not enough to mitigate the overall revenue losses. Additionally, BT confirmed that its current cost-cutting measures had resulted in a 3% reduction in its workforce, bringing its total employees to 117,000. This move is part of a broader strategy to achieve a workforce reduction of up to 55,000 by 2030, which aligns with BT's aim to significantly lower operational costs.In the face of these challenges, Chief Executive Allison Kirkby is pondering the sale or restructuring of BT's international segment to shift focus more heavily onto UK operations. Despite a slight increase in underlying pre-tax profits of 1% during this quarter, the news resulted in a drop of up to 5% in BT's share price immediately following the announcement. Kirkby expressed confidence in the effectiveness of their ongoing cost transformation efforts, stating that the benefits gained were able to offset the declines in revenue due to external factors. She also revealed plans to continue accelerating the deployment of ultra-fast broadband services, mentioning that the coverage had reached 17 million UK households by the end of 2024, with ambitions to reach 25 million by next year. Furthermore, in response to rising operational costs following recent budget measures, BT is considering additional price adjustments for customers and leveraging technology innovations such as artificial intelligence to enhance efficiency while assuring that job cuts under the current scheme will not be intensified. Overall, BT's focus remains on stabilizing its finances while coping with an evolving telecommunications market steeped in competition and customer demands.