Next week marks the beginning of a new era for BT as Allison Kirkby officially takes over as Group CEO.
The Glaswegian brings huge experience to the role: she has already held stints as CEO at three Scandinavian operators and spent four years at BT as a non-executive director.
Here I share some thoughts as to what I believe should be her top priorities in the wake of a few turbulent years for BT.
Crucially, I don’t expect any major change in strategy: when appointed in July 2023, she made it clear that she intends to follow a similar path to outgoing CEO Philip Jansen.
This includes continuation of the major full-fibre investment programme from BT’s Openreach unit. In late 2023, during a briefing for analysts, Openreach confirmed it’s at the halfway point of its plan to bring full-fibre technology to 25 million premises by the end of 2026, adding that it’s reaching about 60,000 new places each week.
But as well as keeping its foot to the floor on the roll-out of full-fibre networks, BT needs to start getting a return on its huge investment. This could mean that fibre uptake, rather than deployment, is one of the main metrics by which Ms Kirkby will eventually be judged.
The new CEO will also be keen to maintain the pace of 5G roll-out, for which population coverage passed 72% in its fiscal 2Q23/24, placing it ahead of rivals. BT is also progressing with the launch of standalone 5G, which promises to support new, vital enterprise applications like network slicing and private mobile networks.
One of the first projects she’ll oversee, however, is the decommissioning of the company’s 3G network, a delicate process on track to be completed by the end of March 2024.
Another top priority should be to improve BT’s standing in enterprise. Here, the operator has long struggled, missing out on opportunities to support businesses’ transformation journeys and being weighed down by the pandemic and stuttering economy. She needs to quickly build on the merger of the company’s Global and Enterprise arms in 2022; their coming together aims to create a single nimbler and more-focused organization.
Another priority will be responding to the threat of new competition. In mobile, the combined Vodafone and Three will hope to seize EE’s position as the best UK network if its mega-merger is approved. Meanwhile, dozens of alternative fibre providers seek to chip away at BT’s dominant position in the fixed-line market.
As a part of this, Ms Kirkby will have to work closely with organizations such as the Competition and Markets Authority and Ofcom, as well as the UK government. In this sense, I see the role of BT CEO as much more than just running a company; it’s about overseeing the provision of critical national infrastructure and dealing with a wide range of demanding stakeholders.
Ms Kirkby may also need to rally staff. In 2023, her predecessor announced sweeping job cuts that will eventually slice BT’s workforce by tens of thousands. The CEO has experience wielding the axe from her stint as boss of Telia and doesn’t appear afraid to make unpopular decisions. Many people will understandably be fearful for their future.
At some point, the new boss may have to contend with a takeover bid. This could come from either French billionaire Patrick Drahi’s Altice, which has already amassed a 24.5% stake, or its next-largest shareholder, Deutsche Telekom. However, both investors could just as easily exit BT: Mr Drahi is looking to sell assets to pare down spiralling debt, and Deutsche Telekom CEO Tim Hoettges told the Financial Times that taking a 12% stake in BT was his “biggest ever mistake” and he wanted his money back. So, several potential scenarios could play out for Ms Kirkby.
Perhaps her toughest challenge will be the stock market. Mr Jansen openly admitted that his main regret was BT’s underperforming share price, which virtually halved during his five-year tenure. Reversing this fall is a daunting task amid rising debt and a decline in free cash flow because of pension deficit payments. Ms Kirkby will need to build on BT’s good recent progress in cost-cutting, which has already seen it achieve an initial target of £2.5 billion in annualized savings and is now striving to reach £3 billion by the end of 2025. Important decisions on BT’s dividend policy could be central to appeasing shareholders.
Other priorities include the repositioning of consumer unit EE — the biggest source of revenue in BT Group — in tandem with the long-awaited launch of New EE in October 2023; overseeing a new method of implementing annual price rises by moving away from a controversial inflation-linked policy; ensuring the transition to digital voice encounters no further hiccups following high-profile delays; and making sure that BT meets its environmental targets, a topic close to her heart.
The new boss will certainly have her hands full.
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