BT cuts 15,000 jobs

UK incumbent carrier BT is to slash around 15,000 jobs as it struggles to offset weaknesses in its Global Services division.

The axe fell as the company reported a loss of £1.3bn for the three months to the end of March, and a loss of £134m for the full year, compared to a quarterly profit of £494m last year and a full year profit of £1.97bn.

Revenues for the quarter and the full year were up one per cent and three per cent respectively, sitting at £5.47bn and £21.4bn.

Commenting on the results, Ian Livingston, BT CEO, said: “Three out of four of BT’s lines of business have performed well in spite of fierce competition and the global economic downturn. However this achievement has been overshadowed by the unacceptable performance of BT Global Services and the resulting charges we have taken. During the year we have changed the leadership of BT Global Services and started to turn the division around.”

The problems at the Global Services division are largely linked to cost overruns on major services contracts with the NHS, although the firm also has a pension deficit in the region of £525m per year over the next three years.

“We will examine doubling the pace of the roll out of super fast broadband next year within existing capital expenditure plans, bringing fibre-based services within the reach of more than a million homes and businesses and securing the jobs of a thousand BT people,” said Livingston. “We expect to deliver a net reduction in operating costs and capital expenditure of well over £1bn in 2009/10.”

Will Draper, analyst at investment firm Execution, said, “BT’s cashflow will benefit from pension top ups of £525m a year and this will support the rebased and sustainable dividend at a level which will be a relief to many.”