BT to merge poorer performing units in £100mn cost-cutting drive

Britain’s largest telecoms group has unveiled a sweeping restructuring of its business, combining its global and enterprise divisions into a slimmer unit called BT Business as it attempts to drive down costs and revive some of its most poorly performing segments.

The move to create BT Business will create £100mn in cost savings by 2025, the group said on Friday, by allowing it to cut management and support roles as well as some product portfolios.

The former monopoly hopes that the merging of two distinct units will create greater simplicity by removing unnecessary duplication and enabling it to offer a single business serving both corporate and public sector customers.

The move comes after the group announced a major shake-up in April that would see all of its consumer units moved under the EE brand, with BT becoming the flagship brand for its enterprise units.

It also follows several consecutive quarters in which the group’s enterprise division — which accounts for about a quarter of group revenues — performed poorly, with adjusted earnings before interest, tax, depreciation and amortisation dropping 23 per cent in the first six months of the financial year, to £660mn.

The global division, which serves foreign and multinational companies, was also a drag on group performance, with adjusted earnings before interest, taxes, depreciation and amortisation dropping 5 per cent over the same period, to £197mn.

BT, which employs nearly 100,000 people, recently said it had increased its 2025 target for cost savings from £2.5bn to £3bn, and that it may have to cut its headcount. “Inflation is pushing us hard,” said BT’s chief executive Philip Jansen as he presented the company’s second-quarter results last month.

BT’s share price has tumbled more than 33 per cent since the start of the year, to 115p.

The group will then be left with three divisions: consumer, supporting British customers; BT Business, supporting business and public sector customers; and Openreach, its networking division that offers broadband infrastructure.

The current chief executive of BT’s global division Bas Burger will take over as head of BT Business, while the chief of BT Enterprise, Rob Shuter, will stand down in the next few months. BT Enterprise has about 30 per cent of the business to business market in the UK.

“By combining the two units, BT Business will bring the Group’s combined assets, products, capabilities and brand to the service of all of our 1.2mn business customers who will benefit from faster innovation and delivery,” Jansen said in a statement. “Throughout the past two very challenging years, Bas and Rob have provided outstanding leadership.”

“Bas is an excellent leader and I’m confident he will build on the plans already under way and drive the combined business back to growth,” he added.