2023-07-31 12:04:46
Posted on Jul 31, 2023 at 1:41 PM
Change in perspective at the head of BT. Allison Kirkby will become CEO of the incumbent operator in the United Kingdom by January 2024, the group announced on Monday. For the first time in its history, a woman is preparing to lead the British operator, whose largest shareholder is none other than Patrick Drahi. She will succeed Philip Jansen, who had resigned in early July, a few weeks following the presentation of a huge transformation plan providing for between 40,000 and 55,000 job cuts, or up to half of the workforce (including suppliers).
Allison Kirkby, 54, has been president and CEO of Swedish operator Telia since 2020. She had also served on the board of directors of BT since 2019. After an initial career at Procter & Gamble and then at Virgin Media, the leader entered the world of telecoms in 2010. Before Telia, Allison Kirkby had managed two other major telecom operators. Scandinavia, Tele2 AB in Sweden then TDC in Denmark.
Plan de transformation
This time, by joining BT, Allison Kirkby did not choose the easy way. The leader arrives as the British telecoms market is in full restructuring. The Vodafone-Three merger at 16 billion pounds has just reduced the market from four to three players for the first time since 1994. Above all, with 39% of mobile subscribers, the new group is ahead of BT, which finds itself number 2 on the mobile.
In addition to having to prepare her response, the leader will also have to transform the former British Telecom, a huge machine of 99,000 employees, weighted with many systems, processes and aging networks. In five years, its share price has lost 50%. The group is facing a drop in revenue (down 17% since 2019) and the decline of its traditional B2B activities, such as voice calls in businesses.
However, the huge investments in 5G and fiber have increased its capital expenditure and its net debt. It is now almost £19 billion, up from £11 billion five years ago.
In this context, the operator has launched an unprecedented transformation plan. The objective is to become a “high-tech and high-margin” telecoms operator by capitalizing, as at Orange, on fiber networks (10.3 million premises connectable to date and 3.1 million subscribed customers) and 4G-5G. The operator has increased the price of its packages, enough to bring in 700 million pounds over the year according to Jefferies. At the same time, BT is playing the simplification card to the fullest, with the aim of generating 3 billion pounds of savings by 2025.
The bad reception of the markets
To this end, the operator has simplified its catalog, digitized its oldest processes and merged its Corporate and International activities to better address its corporate customers. On the employment side, the job cuts plan is the largest since the privatization of the group in the 1980s.
Allison Kirkby will now have to bring the savings plan to an end, when 70% of the objective has already been achieved. In the delayed 2023 financial year, Ebitda increased for the first time in six years (+5% to 7.8 billion pounds) thanks to savings, but sales, on the other hand, remained in decline.
In a press release, Allison Kirkby has already indicated that she “fully supports” the transformation plan. Adam Crozier, president of BT, highlighted his “experience in the sector and his ability to transform businesses”. The markets reacted badly to the announcement, however, with BT stock falling 2% on Monday morning.
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