BT, Verizon to combine international units in $625mn joint venture

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BT, Verizon international venture

Highlights

Verizon will pay BT $625 million to form a joint venture merging their international units, with equal voting rights and UK tax residence.
BT's move supports a broader cost-cutting plan targeting £3.7 billion in savings by 2030 and a headcount reduction from 130,000 to 75,000.
Verizon is leveraging the deal to focus domestically amid intensifying U.S. wireless competition, following 13,000 job cuts and recent price reductions in 2023.

Deal structure and strategic shift

As reported by Financial Times, the agreement announced on Monday creates a separate company that will merge the two groups' international operations while giving BT and Verizon equal voting rights. Verizon is to pay BT $625 million as part of the structure, and the new venture is set to be incorporated in Jersey while being headquartered and tax resident in the UK.

The move marks the culmination of BT's efforts to reshape its international division, which employs about 8,000 staff and was separated for financial reporting purposes last year. BT says the business will be led by former Telstra executive Martijn Blanken, and chief executive Allison Kirkby describes the deal as a major milestone in the group's UK-focused strategy.

The transaction is expected to close in 2027, subject to regulatory approvals and consultations with employee representatives in some countries. Until completion, both companies say their international businesses continue to operate independently.

Pressure on domestic markets drives overhaul

For BT, the sale of half of the unit fits into a broader drive to streamline operations and reinforce its position in domestic broadband and mobile services. Kirkby said in May that BT is expanding its cost-cutting plan from a target of 3 billion pounds in savings by 2029 to 3.7 billion pounds by 2030, with headcount at the FTSE 100 group projected to fall from 130,000 in 2023 to about 75,000 by 2030.

Verizon is also using the deal to sharpen its domestic focus as competition intensifies in the U.S. wireless market. The company faces pressure from rivals including T-Mobile and AT&T, and in November it said it would cut about 13,000 jobs, its largest single lay-off, while also reducing prices on some mobile offers to retain customers.

Our earlier report on Virgin Media O2’s mounting financing strain highlighted how intensifying UK broadband competition has weighed on its credit profile, pushing down its long-dated bond and raising debt-market concerns. We also outlined how the planned Netomnia/Nexfibre arrangement could bring short-term cash but increase ongoing network access fees, potentially squeezing free cash flow as the fibre price war reshapes the sector.

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