BT CEO Warns AI Advances Could Worsen Job Cuts, Sees Undervalued Openreach Unit

BT Group CEO Allison Kirkby warns that AI advancements could deepen the company's planned job cuts of tens of thousands of jobs by 2030. Kirkby believes AI's full potential hasn't been reflected in the telco's job reduction plans. BT is open to offers for its international business, spun off last month, and Kirkby may reconsider spinning off Openreach after upgrading its network to full fiber.

BT Group Chief Executive Allison Kirkby has expressed concern that advancements in artificial intelligence (AI) could lead to deeper job cuts than the company's current plans, which aim to reduce its workforce by tens of thousands by 2030. Speaking to the Financial Times, Kirkby stated that the full potential of AI has not been fully incorporated into BT's job reduction plans [1].

Kirkby's comments come as BT continues to implement its strategic restructuring plan, which includes plans to cut more than 40,000 jobs and reduce costs by £3 billion by the end of the decade. The company has been focusing on transforming its network infrastructure to full fiber broadband and has been open to offers for its international business, which was spun off last month [1].

The CEO also hinted at the possibility of spinning off Openreach, the company's network infrastructure business, if the value of Openreach is not reflected in the company's share price. Kirkby believes that the company's share price does not accurately reflect the value of Openreach, and if this persists, BT may have to consider other options [1].

Meanwhile, BT has been making significant progress in its cost-cutting and transformation efforts. The company reported a 1% increase in adjusted EBITDA to £8.2 billion and a 12% rise in reported profit before tax to £1.3 billion for the fiscal year 2024. These improvements were driven by strong cost control and transformation efforts, which resulted in a 25% year-over-year increase in normalized free cash flow to £1.6 billion [3].

In contrast, Vodafone Group PLC, another major telecommunications company, has been facing challenges in its restructuring efforts. Vodafone reported a 2% year-over-year increase in sales for the fiscal year 2024 but suffered an operating loss of €411 million, mainly due to €4.5 billion in impairment charges in Germany and Romania [3].

Both BT and Vodafone are undergoing strategic restructuring to simplify operations, reduce management layers, and focus on customer experience. However, BT's focus on its core UK market and its progress in cost-cutting and transformation efforts make it a safer pick for investors compared to Vodafone's pan-European challenges [3].

References:
[1] https://finance.yahoo.com/news/bt-ceo-eyes-deeper-job-055332745.html
[2] https://www.gurufocus.com/news/2919445/nvidia-nvda-chief-urges-uk-to-build-ai-infrastructure-amid-1b-government-pledge?r=4bf001661e6fdd88d0cd7a5659ff9748
[3] https://seekingalpha.com/article/4793628-comparing-restructuring-strategies-at-bt-group-and-vodafone