BT results for last quarter reveal plan to make firm more lean and agile
BT Group with its latest quarters results to the end of March 2018 has revealed some long term plans and if everything works out as planned this should create a leaner and more agile group of companies. The key points are:
- Removal of 13,000 jobs from mainly back office and managerial roles over a three year period
- Creation of 6,000 new jobs, at least 3,500 in engineering and others in customer service roles
- 13 year plan to reduce pension deficit including £2.1 billion of payments over three years to 31st March 2020 with further annual payments of around £900 million each year till 31st March 2030
- Investment to increase convergence
- 3 million FTTP premises target confirmed as end of 2020
Looking at the more usual sectors, first there is BT Consumer and it is surprising to see that they only added 2,000 new broadband customers in the quarter, the positive side though was that 202,000 new VDSL2/FTTP connections were added in the quarter. This seems to show that the retail competition for customers is starting to bite with BT Consumer and that the invariably cheaper offers elswhere are winning, but among existing ADSL2+ customers many are still happy to upgrade. In fact BT Consumer and EE were the only two sectors to show positive revenue increases compared to 12 months ago and also positive EBITDA changes.
On Openreach the broadband market added 100,000 new connections (so BT Retail was just 2%) in the last quarter to take the broadband line base to 20.7 million lines and some 555,000 new fibre additions (i.e. VDSL2/FTTP/G.fast), therefore the BT Consumer share of net fibre additions is 36%. The number of GEA connections sits at 9.8 million.
12 months ago the stated Openreach ultrafast footprint was 0.2 million, but today the combined G.fast and FTTP footprint is setting at 1.5 millions, comprised of 560,000 FTTP and the remainder via G.fast pods. Our independent FTTP footprint tracking is sat at 501,000 as of 10th May 2018, but with just 133,000 G.fast premises passed there is a lot of pods that are live for us to spot - the G.fast spotting is more difficult as take-up is still very low and thus we don't get the feedback via our speed test to help spot appearance of the faster services.
The future seems to be a more converged footprint, so it may be that even ahead of any broadband USO that we may see a change in how usage allowances are handled on the 4G network to encourage more people to subscribe, we are thinking BT Infinity via 4G with unlimited usage. Another option is that with three retail brands we might see a refocus with EE dropping fixed line services, Plusnet offering low cost entry level speeds and BT Consumer focusing on the upsell side with ultrafast services.
Looking at the future the paragraph that best sums things with regards to rolling out more full fibre beyond the 2020 target is:
Support for a large-scale deployment of FTTP infrastructure among key stakeholders has increased. However, there is still material uncertainty as to whether a viable economic case can be found for large-scale deployment. The economic case for FTTP remains challenging given superfast broadband coverage now exceeds 90% and the majority of end-users are currently only willing to pay a low premium for additional speeds.Extract from BT Group Q4 results
This may sound not very promising but is actually a very similar position to Vodafone who have a commitment of 1 million premises of FTTP via CityFibre and if that goes well options to increase to 5 million premises in subsequent years.
If the full fibre roll-outs go as planned and ultrafast services see significant take-up in the bulk of the UK where people already have the option of decent speeds and the pension deficit is largely dealt with then by 2030 the long term position may be very good for BT, since it may have a very heavily full fibre network footprint and can reduce the engineering workforce too since once full fibre networks are built there are said to require less maintenance than the older copper networks. Therefore while no one can predict how long any job will last those joining in engineering roles need to be consider that while there may be 10 to 15 years with lots of work to do after that period things seem less certain.
For those working for BT Group and in roles that may face the axe today confirms rumours that have been around for a while, but for those with transferrable skills the competition from firms like CityFibre, Vodafone and others may mean that jobs are available elsewhere in the telecoms industry. Also as part of the making BT group lean and agile seems to involve relocating offices phrased as 'rationalising our combined property estate lots of people may find their role moving around the UK and therefore the big decision to move with your job or stay in your existing area and find a new job.