By Paul Sandle
LONDON (Reuters) – BT will have to find 100 million pounds next year to offset tax increases, adding to the pressure on Chief Executive Allison Kirkby to grow earnings in a tough telecoms market that led to a first-half revenue miss.
Britain’s biggest broadband and mobile company cut its full-year revenue forecast from flat to down 1-2% as it reported a 3% decline in the second quarter to 5.09 billion pounds ($6.59 billion), short of forecasts of 5.22 billion pounds.
Kirkby, who took the top job in February, kept the company’s earnings, capex and free cash flow targets unchanged thanks to efficiencies, including 2,000 job cuts in the first half.
The losses took BT’s workforce down to 118,000, still one of Britain’s largest, which will result in a near 100 million pound increase in the national insurance it pays to the government in the next financial year after last month’s budget.
Kirkby said BT would be “intensifying” its cost cutting to offset the impact and it would look at all the levers it had to hand.
“We will absolutely have to look at our pricing relative to input inflation that we are incurring,” she told reporters on Thursday.
Shares in BT fell more than 7% to a three-month low as investors focused on the poor revenue outlook, driven by difficult corporate and public-sector markets.
Kirkby said BT was “radically turning around and simplifying” BT Business by sharpening its focus on Britain and preparing to carve out its global segment. The latter could partner other providers or be sold.
Despite the revenue drop, Kirkby flagged progress in building Britain’s biggest fibre network, which has now reached 16 million premises, improvements to customer satisfaction and cost reductions, all of which helped core earnings rise 1% in the first half despite the revenue drop.
$1 = 0.7729 pounds)
(This story has been refiled with the correct logo)
(Reporting by Paul Sandle; Editing by Catarina Demony and Kate Holton)
