BT to wield axe on legacy services, costs - Mobile World Live

BT to wield axe on legacy services, costs

07 MAY 2020

BT outlined plans to slash £2 billion from costs within five years, as part of fresh business transformation measures unveiled in its annual results, with the company also killing-off dividend payments until 2022.

The UK-headquartered operator noted its previous “cost transformation programme”, announced in May 2018, had been completed a year ahead of schedule and generated annual savings of £1.5 billion, at a cost of £670 million.

With those cuts complete, management’s attention has turned to measures to simplify its product portfolio, automate customer interactions, modernise IT systems and migrate users off legacy networks to FTTP and 5G.

These changes, along with another reduction in “labour costs” and payments made to external suppliers, are expected to save £1 billion a year by the end-March 2023, increasing to £2 billion two years later.

BT anticipates the plan will cost it £1.3 billion to implement, with the majority of the fees incurred in the first three years.

The company noted it had also taken other measures to refocus its business. In its fiscal Q4 (calendar Q1) it announced the sale of professional services software unit Tikit Group and agreed to sell some of its operations across 16 countries in Latin America. It is also in talks to divest operations in France.

In a statement, CEO Philip Jansen (pictured) said: “BT needs to be leaner, simpler and more agile. Today we are announcing a radical modernisation and simplification programme that will use technology to create a better BT for the future. This five-year initiative will re-engineer old and out-of-date processes, rationalise products, reduce re-work and switch off many legacy services.”

Cutting returns
Elsewhere in its financial statement for the year to end-March, the company announced the suspension of its dividend until 2022 to free-up cash for the potential impact of the Covid-19 (coronavirus) pandemic and fund continued rollout of 5G and fibre. It also became the latest operator to suspend financial guidance for the current fiscal year.

BT noted it would be investing “significantly” in 5G over coming quarters with a target of doubling its footprint by March 2021.

Fiscal Q4 revenue from its consumer operation, which includes mobile operator EE, dipped 4 per cent year-on-year to £2.5 billion. Though not breaking out the reason for the quarterly drop, across the year the company noted regulatory headwinds from international calling and mobile spending caps.

Net profit is not reported for fiscal Q4, but across the full year it fell to £1.7 billion from £2.2 billion in the year to end-March 2019, though the company said the figures are not directly comparable due to accounting changes.

Adjusted annual revenue was down 3 per cent to £22.8 billion.

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Chris Donkin

Chris joined the Mobile World Live team in November 2016 having previously worked at a number of UK media outlets including Trinity Mirror, The Press Association and UK telecoms publication Mobile News. After spending 10 years in journalism, he moved...

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