BT to upgrade cost-savings target to £3bn as inflationary pressures bite
The telecoms giant is likely to set out a £500m increase to a previous target alongside half-year results as it contends with soaring energy prices, Sky News learns.
Mark Kleinman
City editor @MarkKleinmanSky
Wednesday 2 November 2022 19:03, UK
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Undated handout photo issued by BT of their logo. Business Secretary Kwasi Kwarteng has told BT that the Government will examine French billionaire Patrick Drahi's increased 18% stake in the company over national security concerns. Altice, Mr Drahi's investment arm and the firm's biggest shareholder, increased its stake from 12.1% to 18% in December last year, increasing fears that the business could be ripe for a takeover. Issue date: Thursday May 26, 2022.
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BT Group is expected to increase a multibillion-pound cost-savings target on Thursday as it seeks to counter the inflationary headwinds buffeting the UK economy.
Sky News has learnt that Philip Jansen, BT chief executive, is poised to use the telecom giant’s half-results announcement to outline plans to find a further £500m of savings by the end of 2025.
BT’s previously announced target of £2.5bn formed part of Mr Jansen’s efforts to improve the efficiency of the former state monopoly, which he joined in 2019.
Alongside the increased £3bn figure, which one leading shareholder in BT suggested on Wednesday evening was “highly likely”, analysts said that Mr Jansen could also outline a substantial increase in the company’s capital expenditure plans.
He could also set out a sharply increased figure for the number of homes being lined up for full-fibre broadband connections, according to another top investor.
Insiders sought to play down the prospect of the revised cost-savings goal having a significant short-term impact on BT’s 100,000-strong workforce.
Instead, they said, the savings would be largely found from supply chain efficiencies and improvements to the company’s product offering.
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Like the rest of corporate Britain, BT has been hit by soaring energy costs in the past year.
Analysts at Redburn wrote last week that the group’s energy bill had risen by £200m during the period, underlining the impetus to find additional cost savings.
BT has previously said it expects to record earnings before interest, tax, depreciation and amortisation of £7.9bn in this financial year.
BT has been hit by a wave of strike action involving frontline staff in recent months, one of a number of companies facing staff unrest over below-inflation pay offers.
BT declined to comment on Wednesday evening.
