Key facts
- BT's share price has risen 80% since Allison Kirkby became CEO over two years ago.
- Kirkby received £5.6m in pay and bonuses last year, the largest for a BT CEO in over a decade.
- BT is working to resolve issues with its struggling international division.
- The company aims to reduce its workforce by approximately 40% to 75,000 by 2030.
- BT's consumer operations are experiencing growth in subscriber numbers for the first time in eight years.
- Openreach, BT's infrastructure arm, lost 825,000 broadband customers last year and expects to lose another 800,000 this year.
Since Allison Kirkby took the helm as BT's first female chief executive over two years ago, the company's share price has surged by 80%, a significant turnaround that has also seen Kirkby receive substantial remuneration. Last year, her pay and bonus package amounted to £5.6 million, the highest for a BT chief executive in more than a decade.
However, the extent of Kirkby's direct contribution to this revival is a subject of debate. She has been credited with resolving long-standing issues with BT's underperforming international division, a move that allows the company to focus on its role as a 'national champion.' As substantial investments in UK broadband infrastructure near completion, BT is projected to generate £3 billion in annual free cash flow by the end of the decade. The company also plans to reduce its workforce by approximately 40% to 75,000 employees by 2030, with Kirkby recently increasing the savings target to £3.7 billion.
Some industry observers believe that the groundwork for BT's current positive trajectory was laid by Kirkby's predecessor, Philip Jansen. Jansen's tenure was marked by significant challenges, including a dividend cut to fund infrastructure upgrades, navigating the pandemic, a national strike, and substantial cost-cutting measures, including the divestment of BT Sport.
Despite the positive financial indicators, BT faces a competitive landscape, including a resurgent Vodafone. The company also experienced a confusing brand strategy shift, reverting to the BT brand as its flagship consumer offering after previously favouring EE. Nevertheless, BT's consumer operations, encompassing EE, broadband, mobile, and television, have seen subscriber growth for the first time in eight years.
Openreach, BT's infrastructure division, continues to face significant customer losses to discount rivals, though these losses are expected to peak soon. Kirkby has expressed frustration that the value of Openreach, which is projected to connect 30 million homes with full-fibre broadband by 2030, is not fully reflected in BT's current market valuation. Analysts estimate Openreach alone could be worth £30 billion. The potential realization of Openreach's value, possibly by 2030, is seen as a key future challenge for Kirkby, potentially aided by changes in the BT pension scheme's demographics.