In a massive drive to cut costs and boost profits, BT’s London Office was officially sold for £210 million. This comes as part of the biggest jobs cull at BT for almost a decade with a total of 13,000 management and back-office jobs being axed over three years, far more than City analysts had been expecting.
The sale comes after the struggling telecoms firm recruited Cushman & Wakefield to handle the sale of their Newgate Street HQ with the bigger picture to save £1.5 billion. The current HQ is located on the site where Guglielmo Marconi made the first public transmission of wireless signals in 1896, right next to St. Pauls Cathedral. The decision to relocate will cut BT’s association with the site which has stretched back more than a century. BT’s London office, known as the BT Centre houses around 2,100 staff. Although, the company’s single best-known building, the BT Tower in Fitzrovia, will remain unaffected by the changes.
Why is BT’s London office closing?
The head of equity strategy at online traders Interactive Investor, Lee Wild, described the ‘cull’ as an “action BT shareholders have wanted to see for years.” He added: “BT shares began a slow and painful decline two years ago, more than halving in value to make a five-year low last month”.
“Part of the reason for BT’s decline is the inevitable heavy spending needed to upgrade the fibre network with potentially no incremental return.”
Nevertheless, union bosses have claimed the announcement is a “devastating blow”, with the national secretary of the Prospect Union, said “It is particularly disappointing as Prospect has been working closely with BT to ensure that the impact of organisational changes including restructuring and re-organisation have been thoroughly examined but this number sounds unrealistic.”
What next for BT?
With BT’s London office closing, what can we expect from them next? BT bosses already noted that the company would keep a “reduced, but still significant”, office presence in central London. However, their notable UK presence of 300 locations is to be consolidated down to just 30 sites.
As part of the deal, BT will lease back the 300,00 sq ft London office for up to 30 months whilst the relocation to a new HQ begins. Employees will be relocated to one of 7 new regional offices unless they find themselves as part of the leaseback agreement.
BT’s chief executive said of the changes “The Better Workplace Programme is about bringing our people together in brilliant spaces, and transforming the way we work”.
It is understood that BT have drawn up a shortlist of four potential new locations for their London HQ:
1. Canary Wharf Group’s Wood Wharf development: A £3.9bn, 22-acre mixed-use development scheduled to be completed by 2023. The site will also include nine acres of parks, piazzas, squares, and walkways.
2. The International Quarter London, Stratford: A £2.4bn development adjacent to the Queen Elizabeth Olympic Park and Stratford International station.
3. YardNine’s 80 Fenchurch Street: A 14-storey building comprising over 250,000 sq ft in the City of London, due to be completed in summer 2020.
4. Aldgate Developments’ One Braham, E1: A £320m, 18-storey commercial building being developed above Aldgate East Tube Station.