18 May 2023
If you are covering BT’s latest financial results and the announced job cuts, please find below a comment from Matthew Dorset, equity research analyst at Quilter Cheviot:
“BT has seen Vodafone’s job losses and taken them to another level, with up to 55,000 expected to be cut from the workforce by the end of the decade as the business seeks to cut costs.
“The business has faced pressure from alternative network providers, although on the retail side customer numbers have remained stable. On the Openreach side of the business BT had a net loss of 68,000 connections, a reversal of a recent trend of slowing losses. This will be a concern and a figure to watch going forward.
“However, BT remains well capitalised to take advantage of infrastructure demand from the country. Fibre rollout continues apace with 41% of the network completed and reaffirmed guidance to reach 25m homes by 2026. They have also seen attractive tax benefits introduced by the Chancellor, and will increase its capital expenditure to take advantage of these.
“Crucially, BT has been able to maintain a competitive position in the market due to prices being inflation linked. Given competitors do the same there is no real threat of customer churn there and it should be supportive for earnings. Finally, as interest rates have risen at an extraordinary pace, the debt burden facing alternative providers will be good news for BT. While it is a business in transformation, it has a good mix of short and long-term opportunities to take advantage of.”
