BT warns of price rises after £100 million tax hike

BT could raise prices after the Budget added another £100m to 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’ on cost-cutting efforts to counter the rising tax rise due next year as a result of the government’s decision to increase employer contributions.

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

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

BT joins the likes of Sainsbury’s, which also set out its budget tax returns on Thursday, and Marks & Spencer and Primark owner Associated British Foods in revealing the impact of NI changes.

Kirkby said: “It’s new inflationary pressures that we’re having to deal with in our industry.

“We will work harder and faster on the cost transformation and plans we have already put in place,” 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 that a further 2,000 jobs would fall under its ongoing plan to radically cut costs.

The group reported a 10 percent decline in pre-tax profits to £967 million for the six months to September 30, while sales fell 3 percent to £10.1 billion in a ‘competitive retail environment’.

It expects annual sales to fall by 1 to 2 percent, blaming trade outside Britain and a decline in sales of less profitable kits, while also flagging weaker performance in the business and public sectors. BT previously expected sales to rise by up to 1 percent in 2024-2025.

But the company kept its underlying profit expectations unchanged at around £8.2 billion.

The company also laid bare the pace at which previously announced job cuts will decline from 130,000 when the plan was first outlined in 2023 to between 75,000 and 90,000 workers by 2030, as the company looks to shave billions from its cost base.

The company said it has reduced its workforce by a further 2,000, or 4 per cent year-on-year, to 118,000 and saved £433 million in annual costs in the first half alone.

Kirkby said the group is also considering selling or splitting its international arm, which the group has separated from the rest of the business.

She said the company had a “positive dialogue” with other parties about BT Global.

“We’re looking at a range of scenarios to optimize 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 past year.

Kirby took over the top role in February with the aim of turning the business around, doubling cost savings and aggressively rolling out its full fiber broadband network across the UK.

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

She said at the time that the company had achieved its initial target of £3 billion in savings a year ahead of schedule, and said it would cut the same amount by 2029.