Pension agreement reached, fibre ambitions extended (again)
BT will plough £3.7 billion into mobile infrastructure investment and fibre-to-the-premises (FTTP) around the country over the next two years, boosting its FTTP target to 10 million connections by the mid-2020’s amid regulatory and wholesale customer pressure, the company said this morning.
The plan, revealed in its full year financial results, came as the former state monopoly said it is slashing cash spend over the next three years by £1.5 billion and abandoning its central London headquarters in favour of 30 “modern, strategic sites” around the country, as it seeks to plug an £11.3 billion pension deficit.
The company will also cut nearly 12 percent of its workforce (primarily in the middle and back offices). The 13,000 lost jobs will be offset by 6,000 new hires in network deployment and customer service, BT said.
The fundamental strategy rethink by the telecoms giant came after it reached agreement with pension scheme managers.
This will see it make inroads on an £11.3 billion pension deficit through annual payments to the scheme of £900 million annually for a decade, starting 1 April 2020.
Investors have persistently raised concerns over the risk of a cash crunch at the company over the past year.
CTO Simon Lowth said: “This agreement allows us to move ahead with confidence as we deliver on our strategic initiatives such as investing in our network.”
New Enterprise Revenue Streams
In its enterprise segment, BT will “create new revenue streams alongside existing offerings, such as driving take-up of Voice over IP, networking and unified communications, and leveraging its leading security proposition” the company said, without adding further detail.
In February, its network unit accelerated fibre building plans amid pressure from wholesale customers and the government. Two months earlier, Sharon White, the chief executive of regulator Ofcom, had blasted the former state monopoly in a speech at rival Virgin Media’s headquarters, saying: “While most of us rely on decades-old copper connections, seven in 10 people in Spain and Portugal can access full-fibre broadband… we need still bolder commitments. And the biggest player remains BT.”
In April 2018 a report by the Independent Networks Co-operative Association (INCA) revealed that last year smaller scale fibre-building companies passed nearly one million FTTP connections last year – more than double those made by BT’s Openreach.
The report by Independent Networks Co-operative Association (INCA), claimed the latest figures place altnets collectively as the third competitor in new full fibre infrastructure provision, alongside BT Openreach and Virgin Media.