Telecom group BT has announced to cut 4,000 jobs after a challenging year in which the company reported a fourth-quarter revenue of £6.12 billion.
“This has been a challenging year, but BT remains well positioned for the future,” the company said.
BT said the company has strength to withstand setbacks as shown by “strong businesses, underlying operational performance and financial returns.”
According to BT, the jobs will be shed from its Global Services division that serves multinationals, and has been a thorn for the telecoms giant with two big accounting scandals in the past 10 years. The review will cost the company £300m, will better its financial performance, and simplify the business. Most of the jobs cuts will come from managerial and back office areas.
BT has also decided to cut back on its dividend growth ambitions to recover from profit warning and an accounting scandal.
In January this year, a £530 million accounting scandal (unearthed in Italy) and profit warning led to BT’s shares to plunge, and wipe out £8 billion from company’s value. The scandal prompted investors to question whether the company should call time on operations outside of the UK.
“This has been a challenging year for BT,” said BT’s chief executive Gavin Patterson.
“We’ve faced headwinds in the UK public sector and international corporate markets and must learn from what we found in our Italian business,” he added.
“We’ve undertaken a strategic review of Global Services. Technology trends mean that we are now less dependent on owning physical local network assets around the world, creating the opportunity to reposition Global Services as a more focused digital business.”
Patterson said the Global Services organization is being restructured to “enable this strategic refocusing.”
“We’re also accelerating and expanding our cost transformation programmes, most significantly in our central group functions, in Technology, Service and Operations, as well as in several other lines of business. This will help offset market and regulatory pressures and create the capacity for future investment,” he added.
Patterson and former group finance director Tony Chanmugam will not get a bonus for the 2016/17 financial year. According to BT’s 2016 annual report, Mr Patterson was getting a basic salary of £969,000 that year and bonuses worth £4m.
Meanwhile, the head of Global Services Luis Alvarez has departed and will be replaced by Bas Burger from 1 June. Burger is the current head of BT’s Americas division and has been with the firm since 2008.