BT will increase its cost savings target by a fifth and push ahead with inflation linked price rises in 2023 for most customers as it seeks to mitigate higher energy and inflation costs.
“We remain laser focused on modernising and simplifying BT Group,” Philip Jansen, BT’s chief executive, said in a statement on Thursday.
“Given the current high inflationary environment, including significantly increased energy prices, we need to take additional action on our costs to maintain the cash flow needed to support our network investments,” he said.
BT revised its cost savings target from £2.5bn to £3bn by the end of 2025.
It is embroiled in a pay dispute with staff, led by the Communication Workers Union, about a pay package offered in April. Last month, around 40,000 employees downed tools across four days, calling on Jansen to return to the negotiating table to discuss pay.
The group on Thursday posted second-quarter revenues and profits broadly in line with analysts’ estimates, bolstered by its consumer and Openreach divisions, which both implemented inflation linked price increases in April.
BT shares have floundered this year, shedding more than a quarter of their value. They opened nearly 5 per cent lower on Thursday, extending their 2022 decline to about 28 per cent.
The former UK monopoly reported flat revenue in the quarter compared with the previous year, at £5.24bn, in line with consensus forecasts, and a 5 per cent increase in adjusted earnings before interest, tax, depreciation and amortisation to £1.97bn, slightly above estimates.
Earnings in the consumer division increased by a fifth to £670mn, offsetting an 18 per cent drop in adjusted ebitda in the enterprise division.
Most telecoms groups implemented price increases this year that embedded inflation into their mobile and broadband rates. BT opted to increase its mobile and broadband prices in line with the consumer price index, plus a further 3.9 per cent.