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BT has said it will be hit by an approximate £100mn increase in costs after the UK Budget while the telecoms group also cut its revenue guidance.
Chief executive Allison Kirkby, who is attempting to make savings as part of turnaround efforts, said the near-£100mn rise in the next fiscal year was predominantly related to the reduced threshold and increased rate of employer contributions for national insurance that were announced by chancellor Rachel Reeves last week.
Kirkby described it as “just a new inflationary pressure that we need to suffer in our business”, adding that the FTSE 100 company intended to offset all of it with “multiple levers” including accelerating its cost transformation plans, pursuing further workforce productivity measures and looking at the pricing of its products and services. She did not specify whether this meant price rises for consumers.
Kirkby told the Financial Times that she estimated the changes to NI accounted for about 70 to 75 per cent of the total cost increase, with the rest stemming from the rise in the minimum wage.
NI for employers will increase by 1.2 percentage points to 15 per cent from April and that the level at which employers start paying NI for workers will fall from £9,100 to £5,000. It was also announced last week that the national living wage would increase 6.7 per cent to £12.21 an hour from April.
BT employed 71,400 staff in the UK at the end of March.
Her comments came as BT on Thursday lowered its revenue outlook for the 2025 financial year to a decline of 1 to 2 per cent, down from previous guidance of adjusted revenue growth of up to 1 per cent.
It said the move primarily reflected “weaker non-UK trading including reduced low-margin kit sales, along with a softer environment in [the] corporate and public sector”.
Shares in BT were down 7.8 per cent to 131p in morning trading.
The rest of the company’s outlook was reiterated as it also announced an interim dividend of 2.4p per share.
BT reported a 3 per cent decline in adjusted revenue to £5.09bn and relatively flat adjusted earnings before interest, taxes, depreciation and amortisation of £2.07bn in the second quarter, compared with the same period last year.
During the group’s annual results in May Kirkby had announced an additional £3bn cost-savings programme by the end of its 2029 financial year, after completing a previous £3bn cost-savings target, and BT reported it had achieved £433mn in gross annualised cost savings during the first half of the year.
The group reported 181,000 further broadband line losses in its second quarter. It is facing competition from dozens of alternative network providers — or “altnets” — and Virgin Media O2 in the roll out of full-fibre broadband across the country.
BT’s reported pre-tax profit dropped 10 per cent to £967mn for the six months to 30 September compared with the prior year, which it said was primarily due to lower revenue and higher costs. Net debt rose to £20.3bn, from £19.5bn at the end of March.
