Pages

15 May 2009

BT doubles job cuts to 30,000 as it slumps to annual loss

14 05 2009 - BT has slumped to an annual loss for the first time in almost a decade and doubled jobs cuts to 30,000, as the former state-owned telecoms company struggles with a disastrous performance of a key division.

Source: Telegraph.co.uk

----

BT, the telecoms giant, said today it will cut another 15,000 jobs over the next 12 months after making a full-year loss of £134 million due to continuing problems within its Global Services division.

The company revealed that it had already shed 15,000 jobs over the past year, about 5,000 more than previously announced, and said today: "We expect further reductions of a similar level next year."

The group said the performance of Global Services - once the engine room of the company’s growth - was unacceptable and that it would have to take charges of £1.3 billion following the completion of contract and financial reviews at the unit. The division, which provides networked IT services to companies and is now in the process of being restructured, has been hit hard by the downturn and as it become more cautious about how profitable its contracts will prove to be. The group will also take a £280 million restructuring charge on the unit, with further restructuring charges of £420 million over the next two years. Francois Barrault resigned as chief executive of the unit in October last year amid troubles for division and was replaced by Hanif Lalani, the group's finance director.

BT will also be forced to make pension deficit contributions of £525 million for the next three years after the shortfall of the huge fund ballooned to £2.9 billion, compared with a surplus of £2 billion in the previous year. The group’s previous contribution was £280 million over ten years.

Related Links

For the 12 months to March 31, the group reported a pre-tax loss of £134 million, compared with a profit of almost £2 billion the year before, largely wiped out by the £1.3 billion writedown on Global Services in the fourth quarter. Revenue for the period rose 3 per cent to £21.4 billion, up from £20.7 billion.

Looking ahead, BT said it expected revenue to decline by 4 per cent to 5 per cent in 2009-10, reflecting a continuation of the trends seen in the fourth quarter, the impact of lower mobile termination rates and the impact of refocusing BT Global Services.

However, the group will still pay a final dividend of 1.1p, giving a total for the year of 6.5p, albeit a 59 per cent reduction on the previous year’s payout of 15.8p. Shares in the company fell by 3.6 per cent in early trading.

Ian Livingston, chief executive of BT, said that three out of the group’s business had performed well despite the downturn but that their achievement had been overshadowed by the “unacceptable performance” of BT Global Services.

He added that management at the unit had been changed and that the group had started to turn the division around, and that he believed BT would emerge from the recession a stronger company.

Andy Kerr, CWU deputy general secretary, said fresh job losses would be “very challenging” and that, although many job cuts would fall on contractors and agency staff, this was a serious day for staff at the company.

Mr Kerr blamed “damaging mis-management” of Global Services for the poor results but said the union was hopeful this difficult time was now behind the company.

He added that the CWU would continue to work closely with BT to ensure any losses are voluntary and that they were looking at new ways of finding work and retaining permanent employees, including secondment agreements.

Source: Times on line



Post a Comment