AI: Telecom company plans to cut up to 42% of payroll – 05/18/2023 – Tech

BT (British Telecom) is expected to cut up to 42% of its workforce by the end of this decade, as the UK telecoms group embarks on its most radical cost-cutting since it was privatized in the 1980s.

The move comes two days after rival Vodafone unveiled plans to cut 11,000 jobs over the next three years to improve its poor performance.

Chief executive Philip Jansen said the BT group will become “a leaner business with a brighter future”, adding that many of these reductions would come from the end of the full fiber deployment the group is “spending a fortune on today”.

Other roles will go away due to increased digitization, Jansen said, as he said AI would bring about radical changes in the future.

“For a company like BT, there’s a huge opportunity to use AI to be more efficient,” he said of the jobs that will be lost with digitalization and automation, adding that generative AI will bring huge breakthroughs.

BT said on Thursday it would cut between 40,000 and 55,000 jobs, including employees and third-party contractors, by 2030. The current workforce of the FTSE 100 group totals 130,000, including around 30,000 third-party contractors. which are mostly full-time positions.

Faced with rising costs and a series of underperforming businesses, BT had already embarked on a cost-cutting programme. The group said it had achieved £2.1 billion (£2.96 billion) in cost savings, out of a £3 billion target.

The cuts will include 15,000 fiber engineers and 10,000 maintenance workers, a person close to the company said, with another 10,000 shed by increased digitization and automation.

“This is an existing plan, we’re just announcing it and giving people a taste of the landing zone in five to seven years,” Jansen said.

The Union of Communications Workers, the largest union representing BT workers, said the job cuts were not a big surprise.

“Introducing new technology across the enterprise, along with finishing construction of the fiber infrastructure replacing the copper network, would always result in less labor costs for the enterprise for years to come,” they said.

“We have made it categorically clear to BT that we want to retain as many direct jobs as possible and that any reduction must come from subcontractors in the first instance and natural attrition.”

However, John Ferrett, a Prospect negotiator, said the union was “deeply concerned about the scale of these cuts” and that it demanded an urgent meeting with Jansen.

“Announcing such a huge reduction in this way will be very upsetting for workers who have done so much to keep the country connected during the pandemic,” he said.

Jansen told the Financial Times that the job cuts would be carried out in an “organized and considered” manner. “If we do it right, there doesn’t have to be a lot of wear and tear,” he said.

BT’s move to deepen its cost-cutting came as the former monopoly reported a mixed set of annual results. While revenues and earnings beat expectations, its free cash flow — a metric closely watched by investors — disappointed.

In the 12 months to the end of March, the group reported free cash flow of £1.3bn, at the lower end of the range of £1.3bn to £1.5bn it had set. BT said the figure for the current financial year is likely to be between £1bn and £1.2bn – below consensus estimates of £1.3bn – as its capital spending is likely to be higher than forecast. .

BT shares were down nearly 8% in early trading on Thursday, but trimmed those losses to a 3.5% drop by early afternoon.

The group’s annual revenues fell 1% to £20.7 billion, compared with a forecast of £20.5 billion. Its adjusted earnings before interest, tax, depreciation and amortization rose 5% to £7.9 billion, bolstered by above-inflation price increases for some customers’ contracts.