BT warns of worth hikes after £100m Budget tax hit

BT could be set to hike prices after the Budget slapped another £100million on the the telecoms giant’s tax bill, the group’s boss said on Thursday. 

Chief executive Allison Kirkby said the group would go ‘harder and faster’ with cost-cutting efforts to help counter the soaring tax increase due next year from the Government’s decision to raise employers’ national insurance contributions.

Kirkby said this would include a review of prices charged to customers, alongside supply chain savings. 

Greater use of artificial intelligence and automation will also be employed to improve productivity, she added. 

Cutting costs: BT’s boss, Allison Kirkby, said the group would go ‘harder and faster’ with cost-cutting efforts

BT join the likes of Sainsbury’s, which also laid out its Budget tax bill pain on Thursday, as well as Marks & Spencer and Primark owner Associated British Foods in revealing the impact of NI changes. 

Kirkby said: ‘It’s a new inflationary pressure that we need to suffer in our business.

‘We will be going harder and faster on the cost transformation and plans that we have already laid out,’ she added.

She added that as part of the measures the group would ‘look at our prices relative to input inflation’.

The revelation came as BT cut its annual sales outlook and revealed another 2,000 jobs have gone under its ongoing plan to radically cut costs.

The group reported a 10 per cent drop in pre-tax profits to £967million for the six months to 30 September, as revenues slipped 3 per cent to £10.1billion amid a ‘competitive retail environment.

Update: BT cut its annual sales outlook and revealed another 2,000 jobs have gone under its ongoing plan to cut costs

It expects annual revenue to fall by between 1 per cent to 2 per cent, blaming trading outside the UK and reductions to sales of less profitable kits, while it also flagged a weaker performance in the corporate and public sector. BT previously guided for revenue to rise by up to 1 per cent in 2024-25.

But the company kept its underlying earnings guidance unchanged, for around £8.2billion.

The firm also laid bare the pace of its previously announced jobs cull to slim down from 130,000 when the plan was first outlined in 2023 to between 75,000 and 90,000 workers by 2030 as it looks to shave billions off its cost base.

It said it slashed its workforce by just over another 2,000, or 4 per cent year-on-year, to 118,000 and saved £433million in annual costs in the first half alone.

Kirkby said the group was also looking at potentially selling off or breaking up its international arm, which the group has been carving out from the rest of the business.

She said the firm had ‘positive dialogue’ with other parties about BT Global.

‘We are looking at a range of scenarios to optimise that business,’ she said.

BT shares fell 7.21 per cent or 10.25p to 131.85p on Thursday, having risen around 6 per cent in the last year.  

Kirby took over the top role in February with aims to turn the business around and double down on cost-cutting efforts and aggressively roll out its full-fibre broadband network across the UK.

In May, the group announced a further £3billion in cost cuts over the coming years, as Kirkby expanded on plans to turn around the struggling telecoms giant.

She said at the time that the company had hit its initial target of £3billion in savings a year before schedule, and said it would slash the same sum by 2029.