Telecoms giant BT has raised its cost savings target to £3 billion to help it battle soaring inflation and energy costs as the group revealed an 18% drop in first-half profits.
BT said it will save another £500 million by the end of 2025, adding it is also taking steps to offset rocketing costs in the current year, including pricing action in its consumer arm and Openreach business.
The firm increased its savings goal as it reported pre-tax profits falling to £831 million for the six months to September 30, down from £1.01 billion a year ago, due to depreciation from its network build and as rising costs hit its bottom line.
Revenues edged 1% higher to £10.4 billion in its first half.
BT chief executive Philip Jansen said: “Given the current high inflationary environment, including significantly increased energy prices, we need to take additional action on our costs to maintain the cash flow needed to support our network investments.
“As a result, we are increasing our cost savings target from £2.5 billion to £3 billion by the end of 2024-25.”
Mr Jansen said the group “remains on the front foot in these turbulent times” and its financial performance is on track.
The firm is guiding for full-year underlying earnings of £7.88 billion on revenues of £20.9 billion.
BT has already cut £1.7 billion in costs since April 2020 and Mr Jansen is leading an overhaul, including slashing the number of offices across the UK from around 400 to about 30, and simplifying customer billing systems and ranges, with the number of consumer tariffs already reduced by more than 30%.
But the firm is facing pressure from its workforce in a long-running row over pay, with BT and Openreach employees staging a fresh strike last month.
Members of the Communication Workers Union (CWU), including 999 call handlers, walked out for 24 hours following a wave of stoppages in recent weeks.