When BT hired Philip Jansen as chief executive, he was hailed as the ‘right guy’ to lead a long-overdue shake-up.
For years, bosses at the telecoms group had whinged about Whitehall-esque bureaucracy holding back major change at the former state monopoly – while struggling to do anything about it.
Under its previous boss, the flouncy-haired Gavin Patterson, BT was accused of wasting billions on football rights when it should have been upgrading its broadband network.
Since 54-year-old Philip Jansen (pictured) took over, BT has ploughed £12bn into rolling out cutting-edge fibre optic cables. At the same time, it is carving out £2bn in savings
But even BT’s harshest critics are unlikely to level those criticisms at Jansen. Since the 54-year-old took over, BT has ploughed £12billion into rolling out cutting-edge fibre optic cables.
At the same time, it is carving out £2billion in savings, largely by slashing thousands of jobs and reducing its number of offices from 300 to 30.
The shake-up is the biggest in a generation at BT. Jansen wants BT to be seen as an exciting tech business with growth potential, not as a tired old former nationalised industry.
But his drastic actions have also brought turmoil and the threat of nationwide strikes for the first time since 1987.
The decision by chairman Jan du Plessis to leave this year is said to have been prompted by disagreements between the two men over the pace of change.
The Communication Workers Union (CWU) has accused Jansen of treating staff who kept BT going through the pandemic ‘with contempt’.
Add to that the company’s dismal share price performance, a review of its mammoth pension scheme and an upcoming auction of Premier League football rights, and Jansen has a lot on his plate.
He and his allies remain unapologetic about the radical change that is afoot. They argue that BT sorely needs to modernise if it is to remain competitive in the digital age. Its army of small shareholders, some of whom bought into BT when it was privatised in 1984, will be hoping he succeeds.
Jansen, who earned his stripes at private equity-owned businesses including payments giant Worldpay, is understood to have personally held talks with the CWU, although these are yet to yield any breakthroughs.
Union chiefs claim the job cuts are being rammed through too quickly and that office closures will leave some staff without any nearby physical workspace.
They dismissed a recent £1,500 bonus for staff as an attempt to buy off members just as they prepare to vote on possible industrial action this summer.
A widespread walkout across BT’s business, besides being embarrassing, could mean network outages take longer to fix at a time when millions are still relying on internet services to work from home, although insiders insist there are contingency plans for such scenarios.
Jansen recently said he hopes to ‘avoid any kind of walkout’.
‘At the same time, everyone recognised the need for BT to modernise and become more efficient’, he told the Guardian. It won’t work out perfectly for everyone – it can’t when you have an organisation of 120,000 people that you are trying to change dramatically.’
The threat of strikes is just his latest headache.
Although it has long been a staple for small investors and pension funds, BT is not a well-loved stock and has suffered a 30 per cent slump in the share price since Jansen took over. Shares closed at 156.5p on Thursday, well below their peak of 502.6p in 2015.
That has left the company’s market capitalisation sitting at £15.5billion, substantially less than the £20billion that its network arm Openreach was previously valued at on its own.
Under its previous boss, the flouncy-haired Gavin Patterson (pictured), BT was accused of wasting billions on football rights when it should have been upgrading its broadband network
At least some of the share price damage follows Jansen’s decision to axe BT’s dividend until the 2021-22 financial year, to help pay for the fibre broadband rollout.
Investors have been wary of potential extra costs cropping up from the pension scheme revaluation.
The company has also been dogged over uncertainty about what kind of settlement will be reached with regulator Ofcom on broadband pricing.
There has been good news on some of these fronts in recent weeks, however. Last month, Ofcom revealed it will not impose price caps on fibre broadband – seen as the premium segment of the market – as part of moves to give BT and rivals such as Virgin a ‘fair return’ on their investment.
This was a key demand of the telecoms firm, which had argued that strict controls would have put a crimp in its rollout of fibre.
Prices for slower broadband packages offering speeds of 40 megabits per second or lower will remain frozen, Ofcom said, while BT will be able to charge more for faster ones.
And in another boost, an auction of 5G airwaves to mobile operators resulted in less being spent than analysts had predicted.
BT-owned EE shelled out £452million – a relative steal compared to the £1billion that UBS had feared it may end up paying.
Elsewhere, revenues from BT Sport, laid low by pub closures during the pandemic, are expected to recover this summer as pubs across Britain gradually reopen. But there are still some storm clouds rumbling on the horizon.
BT’s triennial pension review in June is expected to reveal a deficit of around £9billion. Anything bigger will mean having to shell out larger contributions to plug the gap.
An auction of Premier League football broadcasting rights is also a potential flashpoint, although industry observers broadly expect fees to fall this time round.
But it is the threat of strikes – though not yet confirmed – that remains the most potent worry.
Many in the City see uncomfortable parallels with the CWU’s recent clashes with Royal Mail.
That resulted in modernisation efforts grinding to a halt at the postal service, as well as the departure of former boss Rico Back last summer, before a peace deal was eventually brokered.
Insiders at BT insist Jansen is not taking the threat lightly. But he is resolute in his belief that BT needs to become more akin to a tech company in the future.
He may find such a radical approach – typified by Facebook’s famous ‘move fast and break things’ motto – comes back to bite him.
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