For a long time, I’ve recommended investors avoid the BT (LSE: BT.A) share price. The company’s debt, poor customer service record, and growing competition in the UK’s telecommunications sector are all red flags, in my opinion. However, yesterday the company published its plan to “boost” its UK business and, following the release of this update, my opinion of the group is starting to change.
Putting the customer first
I’ve long thought that the first place BT needs to look if it wants to return to growth is customer service. Of the 5,000 people who have left a review of the company on Trustpilot.com, 90% gave the business a one-star rating. By comparison, TalkTalk has an average rating of three stars with 36% of the 40,000+ reviewers giving it five stars.
The good news is, BT’s managers seem to have realised customer service is lacking, and the “boost” plan is designed to change that. First off, the firm is accelerating a plan to return all of its call centres to the UK and Ireland by January 2020. That’s a year ahead of schedule. It’s also planning to answer customer service calls in the service centre closest to the customer, whenever possible.
On top of this, the company is planning to transform 600 EE stores into dual-branded BT/EE stores across the UK. According to BT’s own estimates, this will put 95% of the UK population within 25 minutes drive of receiving personal help from a BT assistant.
And that’s not all. The group is also planning to train up a team of 900 experts for a “Home Tech Team” to help customers with tech in their homes. A new team of Tech Experts for small business customers is being trained up as well.
Also in the works are BT-sponsored community training centres for digitally excluded people, as well as other initiatives the company believes will help bring digital skills to more than 10m people by 2025.
Improving infrastructure
On the infrastructure side, BT said yesterday it will be upgrading 700,000 homes and businesses to superfast broadband by the summer of next year, at no extra cost. It will be one of the first mobile providers in the UK to launch 5G mobile plans and is planning to connect 15m homes and businesses to full-fibre broadband by the mid-2020s.
It’s encouraging to see that BT has finally decided to take these bold actions. Management seems to want to build the brand into something that people can trust.
Funding for the customer service strategy has already been earmarked with the £250m-£350m pot set aside in BT’s latest results. The roll-out of fibre might cost a bit more, however, and management has warned a dividend cut might be needed to fulfil its promises.
Conclusion
Overall, I think this is a big step in the right direction for BT, but I’m not a buyer of the stock just yet. The firm still has a mountain of debt to deal with and pension obligations that eclipse the market capitalisation of most FTSE 100 firms.
But if that’s something you are willing to overlook, then now could be the time to buy the BT share price as the company gets going on its efforts to restore customer confidence and turn the business around.
