Carlos Slim reduces stake in operator as BT Group reports falling sales, except in Consumer services, but better margins
Allison Kirkby, BT Group’s CEO, has again turned to someone she previously worked with in her bid to improve the operator’s performance. This time she has appointed Jon James as the new CEO of BT Business.
BT Business was formed in early 2023, combining the UK division that delivered services to UK enterprises in the public and private sectors and BT Global. Both have been struggling for years.
James is the former CEO of Denmark’s Nuuday which was created when as CEO of Denmark’s national operator, TDC, Kirkby split infrastructure (TDCNet) and services (Nuuday) into standalone subsidiaries in a bid to release more value. James took up his role at Nuuday in 2021. In that role, he described himself as the “IT dragon slayer” as he successfully grappled with mainframe based legacy systems. Read more about that here.
James will start on 3 March, replacing the long-serving Bas Burger who led BT Global from 2017 (formerly BT Global Services). Burger’s will continue at BT: Kirkby made it clear from when she took up the reins at BT, early last year, that she wants to focus on the UK market. Relieved of his duties at BT Business, Burger will be tasked with devoting “all of his time to the optimisation of BT’s international operations and explore options for the unit,” according to a statement from BT.
That could include recruiting a buyer or partner to take on BT’s highly innovative Global Fabric infrastructure which Kirkby views as a drain and distraction. See also this interview with CTO of what was BT Global, Colin Bannon.
Kirkby said, “Jon’s considerable experience from the UK and European telecoms markets, together with his track record in leading businesses through transformation, will be hugely valuable as we fully focus BT Business on the UK”.
Before his tenure at Nuuday, James filled senior positions at Tele2 Netherlands, the Swedish cableco Com Hem and the UK’s Virgin Media.
James added, “BT Business has an unbeatable combination of deep customer relationships and world-class technology expertise, and I am looking forward to working with Allison, Bas and the BT Business team as we build an even stronger asset for our customers, our shareholders and for the UK.”
Since becoming CEO of BT Group, Kirby has appointed Tom Meakin, a former McKinsey partner with whom she had worked, was added to the board in April 2024 to advise on strategy. He was formally appointed Chief Strategy and Change Officer in September, when Harmeen Mehta, Chief Digital and Innovation Officer, was let go. Mehta had arrived to great fanfare and promises of IT transformation in January 2021, joining from Bharti Airtel.
Marc Allera, CEO of Consumer, announced his intention to leave in November 2024. He will be replaced by from 1 April by Claire Gillies.
Sales mostly down, margin up
The new recruits face some serious challenges. BT’s announced it Q3 trading figures on 30 January. During the quarter, to the end of December, its total revenues fell 3% compared with the same period in 2023, to £5.18 billion.
This was blamed on “continued challenging non-UK trading conditions” and lower smartphone sales.
BT Business reported a 2% decline in revenues, to £1.98 billion, which includes sales to other parts of BT. Over the first three quarters of the current financial year, BT Business’ revenues have dropped 5% year on year to £5.85 billion
The larger Consumer division’s revenues also fell over the first three quarters of the fiscal year, by 2%. It says this is due to selling fewer phones and that service revenues picked up in Q3.
Despite falling sales all round, BT Group’s margins improved slightly due to reduced cost, which is a cornerstone of Kirkby’s strategy with adjusted EBITDA of in at £2.1 billion, up 4% year on year.
Kirkby’s verdict on progress
Here’s what Kirkby had to say: “Our ongoing modernisation continues at pace, delivering a further step-up in fibre build and take-up, customer satisfaction and EBITDA. Benefits from our cost transformation more than offset lower revenue outside the UK and weak handset sales.
“Openreach again performed strongly with the highest ever full fibre build, passing more than 1 million premises for the fourth consecutive quarter, and connecting a new record of nearly half a million customers. Consumer returned to service revenue growth and continued to expand its full fibre and 5G customer bases. In Business, our core UK channels were stable. Cost transformation remains firmly on track, with excellent progress on both energy costs and productivity in the quarter.
“We continue to make progress towards becoming fully focused on the UK, with the sale of our data centre business in Ireland. I am also very pleased to welcome Jon James to BT’s Executive Committee as the new CEO of a UK-centric BT Business, effective early March. This appointment enables Bas Burger to dedicate his time to the optimisation of our international business segment, which is progressing to plan.
“BT’s continued delivery means we remain on track to deliver our financial outlook for this year and our cash flow inflection to c.£2.0bn in 2027 and c£3.0bn by the end of the decade.”
Carlos Slim cuts stake in BT
Today, in an exclusive, Capacity, reported that Carlos Slim, the Mexican billionaire and one of the world’s richest people, reduced his stake in BT Group – from 4.31% to 4.24% – for the first time since investing in the operator in June 2023.
Previously, Slim had incrementally increased his stake since the first investment in June 2023, which was read by the market as supporting Kirkby’s strategy.
Slim’s reasons for disposing of the BT shares are unclear.