BT slashes workforce as Talktalk takeover adds to turnaround challenge

BT has cut its workforce by 11 per cent as boss Allison Kirkby presses ahead with an overhaul of the telecoms giant, just weeks after rescuing struggling rival Talktalk from administration.

The cost-cutting drive helped push pre-tax profits up 12 per cent to £1.1bn in the six months to September, despite revenue growing just one per cent to £8.8bn.

The former state monopoly said its workforce, including contractors, had shrunk to 90,000 over the past year, helping deliver £312m in annual savings as it looks to simplify the business and cut costs.

The reductions form part of a wider restructuring plan that will see BT’s workforce fall to between 65,000 and 70,000 by 2030, excluding its international operations.

But while the cuts have helped boost profits, BT’s finances remain under pressure. Cash left over after running and investing in the business plunged 59 per cent to £236m, while its debt pile grew by £1bn to £21bn.

The results come as BT takes on the task of integrating TalkTalk’s consumer and wholesale businesses, which it rescued from administration last month after the struggling broadband provider failed to find a buyer.

The deal is expected to cost BT around £400m this financial year, with the company now responsible for services used by 2.5m TalkTalk customers.

“Our UK-centric strategy and transformation is clearly delivering with £312m of annualised savings achieved in the first half, as we continue to simplify and modernise”, Kirkby said.

Broadband rivals under pressure

BT’s broadband infrastructure arm Openreach reported record demand for its full-fibre network, with more than 10m homes and businesses connected by October.

The milestone comes as Britain’s broadband market faces mounting pressure from fierce competition and the heavy debts accumulated by companies racing to build rival fibre networks.

Virgin Media O2, which is grappling with a £22bn debt pile, is reportedly in talks to use Openreach’s network to serve new customers while shelving plans to upgrade parts of its own infrastructure.

The potential tie-up would mark a significant shift for BT’s biggest broadband rival, which has spent years investing in its own network to compete with Openreach.

BT has also struggled to hold on to customers. Openreach lost 366,000 broadband lines during the first half and expects to lose around 800,000 over the full year.

Meanwhile, its consumer broadband business reported a three per cent fall in average revenue per customer as competition continued to weigh on prices.

Kirkby said BT was making progress despite the challenging market, with more customers taking up its faster broadband services.

The company maintained its full-year forecasts, including around £2bn in cash left over after running and investing in the business, excluding the impact of the TalkTalk acquisition.

BT also increased its interim dividend by two per cent to 2.5p per share.