Inflation, cost pressures and soaring energy prices. No, not the Bank of England, but BT, which is providing in miniature an illustration of how the squeeze from many directions has intensified at pace. A share price that was 195p in mid-July is now 116p, down 9% on Thursday’s half-year update. The chief executive, Philip Jansen, talks bullishly about how BT’s Openreach subsidiary is building its fast-fibre broadband network “like fury”, but there is a strong sense here that the financial part of the job has suddenly become harder and more complex.
In the form of more expensive fibre, inflation will play a role in bumping up BT’s capital expenditure bill this financial year from £4.8bn to £5bn. Energy costs will also be up by £200m, contributing to cashflow arriving “towards the lower end” of the previously advertised £1.3bn-£1.5bn range. Jansen has ordered more cost cuts and efficiencies, and the hint of job losses in the offing won’t improve the mood around the pay dispute with the Communication Workers Union. The new savings target for the end of 2025 is £3bn, up by a cool half a billion; great if achieved, but the last mile tends to be hardest.
