BT announces further job cuts as global services hit (Roundup)

May 14, 2009, 11:13 GMT

London - Telecommunications giant British Telecom (BT) announced large-scale job cuts Thursday after recording pre-tax losses of 134 million pounds (202 million dollars) in the financial year up to the end of March 2009.

The company said a further 15,000 jobs would be cut in the coming year, the equivalent of 10 per cent of the workforce. A similar number of posts were cut in the previous financial year.

The losses for 2008/2009 compare with a pre-tax profit of 1.9 billion pounds in the previous financial year, BT said.

However, overall group-wide revenues for the year rose by 3 per cent to 21.4 billion pounds. In the new financial year, revenue was expected to decline by between 4 and 5 per cent.

The 2008/2009 deficit was due mainly to problems at BT's global services arm, which provides IT networks to multinational businesses. The sector saw write-downs of 1.6 billion pounds last year as costs spiralled out of control.

Losses accelerated sharply in the last quarter, to 1.3 billion pounds, BT said.

'Three out of four of BT's lines of business have performed well in spite of fierce competition and the global economic downturn,' said BT chief executive Ian Livingston.

'However this achievement has been overshadowed by the unacceptable performance of BT Global Services and the resulting charges we have taken.'

Pension fund shortfalls were another major problem area, BT said. The company announced that it would make 525 million pounds of pension contributions in each of the next three years to help cut the scheme's deficit.

BT also cut its full-year dividend by a drastic 59 per cent from 15.8 pence to 6.5 pence per share.

BT said it was aiming to cut the jobs through natural wastage, non-replacement and voluntary redundancy and had no plans for compulsory lay-offs.

The company employs 147,000 people in 170 countries.

BT also indicated that it was considering bringing back some work which has been outsourced to countries like India in recent years.

'Our aim is to work closely with the unions to reduce BT's total labour costs, of both direct and indirect staff, as this is critical to the success of the company going forward,' said a BT spokesman.