BT's CEO Hints at Deeper Job Cuts and Possible Openreach Sale Amid AI Revolution

BT Group's CEO, Allison Kirkby, has hinted that the company may deepen its planned job cuts amid the emergence of artificial intelligence technology. Kirkby also suggested a sale of Openreach, the unit that maintains network infrastructure, is a possibility if the value of the unit is not reflected in the BT share price. The company has already announced plans to cut up to 55,000 jobs by 2030.

BT Group's CEO, Allison Kirkby, has indicated that the company may deepen its planned job cuts as artificial intelligence (AI) technology continues to advance. Kirkby also suggested that a sale of Openreach, the company's network infrastructure business, is a possibility if the value of the unit is not reflected in the BT share price. The company has already announced plans to cut up to 55,000 jobs by 2030.

In an interview with the Financial Times, Kirkby stated that the company's current plans to cull more than 40,000 jobs and strip out £3 billion ($4 billion) of costs by the end of the decade "did not reflect the full potential of AI." She noted that "Depending on what we learn from AI, there may be an opportunity for BT to be even smaller by the end of the decade" [1].

Kirkby also opened the door to a possible future spin-off of Openreach, the company's network infrastructure business. She stated that she did not feel the value of Openreach was reflected in the company's share price and if that persisted, BT "would absolutely have to look at options" [1].

The company has been undergoing significant restructuring efforts under Kirkby's leadership. Last month, BT reported that strong demand for fibre broadband and more than £900 million of cost savings had helped to shore up its full-year earnings and boost cash flow. Resilience at Openreach offset declines in revenue and profit at its business and consumer units, where legacy voice services continued to wane and handset sales fell [1].

BT's focus on the UK market entails fewer risks than Vodafone, which includes Germany. Vodafone has been more volatile, appreciating by only 12% since May 2022, compared to BT's 65% gain over the same period. Vodafone's restructuring has been more aggressive, involving the sale of underperforming assets and regulatory approval to merge its UK operations with Three UK [3].

BT is targeting £3 billion in savings by 2029, including a significant workforce reduction to 75,000 by 2030 from 130,000 in 2023. The company has already achieved a first £3 billion cost and service transformation programme in FY-24, one year ahead of schedule [3].

References:
[1] https://www.marketscreener.com/quote/stock/BT-GROUP-PLC-4003616/news/BT-boss-Kirkby-expects-AI-to-deepen-job-cuts-FT-reports-50244434/
[2] https://finance.yahoo.com/news/bt-ceo-eyes-deeper-job-055332745.html
[3] https://seekingalpha.com/article/4793628-comparing-restructuring-strategies-at-bt-group-and-vodafone