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By Nina Trentmann 

BT Group PLC is looking for additional savings on top of a continuing cost-cutting drive at a time of declining revenue.

The British telecommunications company Thursday reported group revenue of GBP11.59 billion ($14.77 billion) for the six months ended Sept. 30, down from GBP11.79 billion in the prior-year period. Revenue is set to fall by around 2% in the 2018-19 fiscal year ending March 31, BT said.

It launched a program in May to reduce head count by 13,000 over three years and to dispose of various real-estate assets, netting total savings of GBP1.5 billion. BT had 105,800 employees as of March 31.

Around 2,000 people have left the company already, and savings will amount to GBP350 million by the end of the financial year, the company said.

"There may be scope to accelerate" the GBP1.5 billion cost-savings drive, Chief Financial Officer Simon Lowth said in an interview with CFO Journal, adding that management would evaluate the potential for further opportunities "to address costs and productivity." This could involve simplifying some of the company's processes, he said.

The decision about extending the cost-savings program likely will be taken by incoming Chief Executive Philip Jansen, who takes over from Gavin Patterson on Feb. 1.

BT's CFO has no choice but to drill down on costs, according to Dhananjay Mirchandani, an analyst at Sanford C. Bernstein. "Cost reduction is a nonnegotiable item in an industry with anemic or even declining revenue growth," said Mr. Mirchandani. "Most of the incumbents in this industry are in a stage of very slow earnings growth."

The company's expenses for content and customer service have risen, and wages for its employees in the U.K. could follow suit, said Mr. Mirchandani, underlining the need to shrink costs.

There is additional potential to do so in BT's Openreach division, the unit that develops and maintains the U.K.'s main telecommunications infrastructure, according to Mr. Mirchandani. BT has around 31,000 engineers in its Openreach business, compared with about 14,000 at competitor Deutsche Telekom AG. "There is a material opportunity for elevated efficiency," the analyst said.

BT's finance function is contributing to the cost-savings drive, said Mr. Lowth, adding that some jobs might be cut there to help reach the layoffs target. The finance department also is looking to overhaul its processes and infrastructure, Mr. Lowth said. "We are in the early stages of applying artificial intelligence and automation," he said. He didn't provide more specifics.

Write to Nina Trentmann at nina.trentmann@wsj.com

(END) Dow Jones Newswires

November 01, 2018 14:01 ET (18:01 GMT)

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