BT Group, one of the UK's largest telecom companies, has announced plans to cut up to 55,000 jobs over the next five to seven years in an effort to reduce costs and streamline its business. The company plans to rely more heavily on technology, including artificial intelligence (AI) and digitization, to achieve these goals.
BT's current workforce stands at around 130,000, but the company aims to reduce this to between 75,000 and 90,000 by 2030. CEO Philip Jansen stated that around 10,000 of these roles would be replaced by digitization and automation, and that AI would be a significant factor in the company's future operations.
Jansen noted that BT's chatbot, Amy, was already dealing with a significant number of customer queries, and that the company was exploring new products and services that could be developed using generative AI and large language model AIs. He also stated that digital networks require fewer people to service and repair them, as they tend to go wrong less often and can be fixed more easily than older networks.
The announcement comes as traditional telecom companies continue to struggle in the face of competition from tech giants such as Apple and Google. European telecom firms have been particularly hard hit, delivering lower returns to shareholders than their US counterparts over the past decade, according to McKinsey.
BT has already cut £2.1 billion ($2.6 billion) in costs since April 2020, but the planned job cuts are significant. Matt Britzman, an equity analyst at broker Hargreaves Lansdown, called the cuts "drastic," but noted that they were not overly surprising given the company's mounting costs and slim margins.
BT's revenue fell by 1% to £20.7 billion ($25.8 billion) for the year to March, with growth in its Openreach fibre broadband network offset by declines in other businesses. Adjusted earnings rose by 5% to £7.9 billion ($9.8 billion).
The news prompted a drop in BT's share price, with shares falling by 8% in London due to higher expenditure leading to a drop in free cash flow. However, the company's strategy of building out its broadband and 5G networks and then monetizing the infrastructure in place could lead to future growth, according to Britzman.