Shares in BT Group (LON:BT.A) have fallen deep into the red in London this morning, with investors reacting negatively to the telco’s new strategy which involves slashing 13,000 jobs over the next three years as well as the company moving out of its headquarters in Central London. The FTSE 100 group separately updated investors on its fourth-quarter performance, reporting a fall in revenue, and unveiled a rise in its pension deficit.
As of 09:24 BST, BT’s share price had given up 7.69 percent to 220.25p, underperforming the broader UK market, as compared with a 0.10-percent gain in the benchmark FTSE 100 index. The telco’s shares have lost just under 30 percent of their value over the past year.
BT updates on strategy
BT updated investors on its strategy this morning, unveiling plans to axe about 13,000 jobs over the next three years, mainly back office and middle management roles, while hiring 6,000 new employees to support network deployment and customer service. The telco’s cost cutting drive also includes plans to exit the group’s headquarters in Central London.
BT’s strategy involves accelerating the restructuring and transformation of its Global Services division, as well as launching new converged product offerings and increasing FTTP and mobile infrastructure investment within an annual capex allocation of around £3.7 billion.
Q4 results and pension deficit
The telco further updated investors on its fourth-quarter performance, posting a one-percent drop in reported revenue to £5.97 billion. The group’s adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) meanwhile came in two percent lower at £2.08 billion.
“We can see through regulatory pricing pressure and from 2021 onwards we can see EBITDA grow again,” Chief Executive Officer Gavin Patterson said in an interview on Bloomberg TV, adding that the company was also signalling to the market that it thinks its dividend will remain unchanged for the next two years.
BT separately disclosed its triennial pension funding valuation, saying that its funding deficit stood at £11.3 billion as at June 30, 2017, with the increase from the 2014 valuation mostly due to a fall in long-term real interest rates. The company expects to meet the deficit over a 13-year period.