How much longer can BT retain full ownership of its access division and tower estate?
BT is to consolidate its BT Global and BT Enterprise divisions into a single BT Business unit. The head of BT Global, Bas Burger (pictured), will lead the new entity; Rob Shuter CEO of BT Enterprise will leave the operator after a two-year stint in that role. Burger has been Global CEO since 2017.
The move was flagged back in November, as neither has fared well for some years. BT is saying that synergies and deduplications will save it at least £100 million in gross annualised savings by the end of the financial year 2024-2025. This is part of the drive to make annual savings of £3 billion by that time. The target was raised from £2.5 billion in November.
Currently the two separate business divisions cost about £6.5 billion to run – or just over a third of BT Group’s total annual operational expenses.
Mergers are not silver bullets
Mergers whether between two internal divisions or as a result of two separate entities coming together can be extremely difficult to combine due to disparate cultures, processes, systems, products and services, developed over many years. More fail than succeed in delivering the expected synergies. No doubt more details will emerge on this front in due course.
The time, cost and effort required to integrate them successfully is frequently seriously underestimated and its challenging to ensure that customer experience and service doesn’t deteriorate in the process.
Also in this case, the hope it that two negatives will create a positive. This works in grammar and multiplication, but creating a successful business from two ailing ones is far less certain. And the main driver appears to be saving money rather than customer experience, for instance.
On the upside, the organisational chart will look neater with just three customer-facing units – business, consumer and Openreach. But as BT continues to thrash about in the shallows, you have to wonder how long it can retain full ownership of its access division and tower estate before being forced to sell at least a stake in them to raise funds and reduce debt.
* Reduce is term used in cooking to mean thickening of a soup or sauce or any other liquid to intensify the flavour and take up less room by heating it to evaporate excess liquid.