Two days apart, the two main British telecom operators announced the biggest redundancy plans in their history. Vodafone fired first. The group announced on May 16 its intention to shed 11,000 employees over three years, or 12% of its workforce.
If this restructuring plan surprised by its magnitude, it was expected. Vodafone is going through a difficult period with a stagnation in its turnover at 45.7 billion euros for the 2022/2023 financial year. With the pressure on prices linked to inflation and increased competition, the operator is struggling in these historic markets of Germany, Spain and Italy.
And if Vodafone can post an exceptional operating profit of 14.3 billion euros against only 2.8 billion during the previous financial year, it owes it above all to its disengagement from its subsidiary of telecom towers (TowerCo), Vantage Towers , largely sold to the KKR and GIP funds.
Wishing to refocus on Europe and Africa, Vodafone has been carrying out a vast program of restructuring and asset disposal for several years. The object of all the rumors on the financial markets, the second largest operator in the world would have notably refused, in February, an offer of 11 billion euros from Iliad, the group of Xavier Niel, to buy back its Italian activities.
Vodafone withdrew from France in 2011 by selling its 44% stake in SFR to Vivendi. According BFM BusinessStéphane Richard, then CEO of Orange would have led between the summer of 2020 and the beginning of 2021 discussions with his British competitor for a marriage between equals which would have created a European giant.
AI could cut 10,000 jobs at BT
Same cause, same effect. BT Group announced on May 18 that it was going to destroy up to 55,000 jobs, or 42% of its workforce, by 2030. The former British Telecom saw its turnover contract by 1 % to 20.7 billion pounds while its pre-tax profit fell 12% to 1.7 billion pounds in its full year ended in late March.
This is not BT’s first restructuring. The group has been committed, since April 2020, to a cost reduction plan which has already enabled it to obtain 2.1 billion pounds of “synergies” out of a target of 3 billion. The operator closed its consumer business outside the UK and merged its Global and Enterprise divisions into a single BtoB entity, BT Business, leading to 3,000 job cuts in the process.
With this massive social plan, BT anticipates this time the changes to come. As in other European countries, the telecom sector is undergoing a scissor effect. The deployment of 5G and optical fiber will be completed in a few years while 2G/3G are about to be decommissioned and the copper network is on the way to extinction.
After this period of major projects, the need for labor will be mechanically less sustained. Especially since the new fiber and 5G infrastructures, which are more stable and resilient, will be easier to maintain. CQFD.
Opportunistic, Philip Jansen, CEO of BT, also intends to use artificial intelligence to automate a number of its activities such as the processing of telephone calls from its customer service or the diagnosis of network anomalies. This introduction of AI alone could lead to the elimination of the equivalent of 10,000 jobs.
BT, an example to follow across the Channel?
The arrival of generative AI tools such as ChatGPT would have given Mr. Jansen confidence to go even further, according to comments reported by the BBC. According to him, AI would make services faster, better and more transparent, without customers having to feel like dealing with robots “.
On May 11, BT’s digital division announced in a press release that it was working with ServiceNow to modernize the group’s service management, thanks in particular to the contributions of AI. The partnership with the American publisher is already bearing fruit in the management of BT’s internal IT and in the area of customer relations.
Will the path taken by BT be followed by other telecom operators, particularly in France? The echoes recalls that the British incumbent operator is a pioneer. It was the first to be privatized in Europe in 1984, to internationalize or to launch into fiber optics.
In France, operator revenues are also stagnating. Orange has, moreover, already embarked on the path of restructuring by eliminating 670 positions within its corporate subsidiary and by reorganizing its network of stores in France. Note, finally, that Patrick Drahi, telecom magnate and boss of Altice (SFR), is the largest shareholder of BT, holding 18% of its capital. What to give ideas?