Why BT’s house party with EE is about to end in a hangover
If there’s a crisis on the British high street, no one told Philip Jansen. The BT boss has announced that his company will return to bricks-and-mortar, shacking up with mobile subsidiary EE.
The shops are part of a wider transformation plan at the telecoms stalwart. Since taking over as chief executive in February, Jansen has desperately tried to salvage the firm’s sliding share price.
The process will be brutal. At least 13,000 jobs could be lost in the coming years, while the company will also close 90 per cent of its offices. Meanwhile, Jansen must keep shareholders happy.
When the former Worldpay boss swept in after the turbulent tenure of Gavin Patterson, it was clear BT needed a brand revamp and the group’s new high street stores will be key to keeping the firm relevant to the public.
For Paolo Pescatore, telecoms analyst at PP Foresight, Jansen’s efforts to slim down the company are a crucial step in the right direction in a cut-throat market.
But the current strategy might not be bold enough. While BT has made moves to streamline its services, a more structural shake-up may be necessary to simplify the business.
The crux of the company’s turnaround – and therefore Jansen’s success – will lie in the less glamorous world of full-fibre broadband. The national champion is investing for the future and, for the short-term at least, it’s shareholder returns that could suffer.
Prime Minister Boris Johnson has vowed to roll out superfast connections across the country by 2025. It’s a bold claim, and it rests on Jansen as head of the country’s largest broadband provider to work out the details. This presents the new BT boss with an opportunity, but also plenty of risks.
The path to full-fibre is littered with potholes. BT has made no bones about its concerns over regulation, and the chief executive has handed a six-point plan to No 10. Moreover, the telecoms giant faces a huge threat from a potential tie-up between rivals Virgin Media and Sky.
Even if Jansen can steer his way through the challenges of full-fibre, he must still find a way to fund it. The company’s dividend is steady for now, but it seems unlikely the shareholder payout will make it through such a radical turnaround unscathed.
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