BT must be more efficient

BT Group has announced plans to axe around 15,000 jobs as part of its strategy to increase efficiency. An investigation into BT's productivity by the popular financial website The Motley Fool - Fool.co.uk shows that further efficiency improvements could be required if BT is to raise its game in a competitive telecom sector.

Currently, revenue in the telecom sector is around £260,000 for every full-time employee. But BT is some 30% less productive - its employees generate just £185,000 per year.

Vodafone, on the other hand, boasts one of the highest levels of productivity. Its full-time workforce generates almost £500,000 per employee or twice the industry average. Vodafone's workforce also generates almost three times more revenue per worker than a comparable BT worker.

David Kuo, Director at The Motley Fool, says: "BT Group's low productivity is an unfortunate feature of its history as a denationalised monopoly. Although direct comparisons between, say, Vodafone and BT are difficult because one is mobile telecom business and the other fixed line, investors should nevertheless take this into account.

"Private investors should consider efficiency and productivity of businesses when making long-term investment decisions. Lower productivity can translate to lower long-run returns for shareholders.

"A rising tide may lift all boats, but a financial hurricane can sink many ships. BT has benefitted from a rising financial tide, but its low productivity has now been found wanting."