BT is to axe 4,000 jobs at worldwide, with profits plunging 19 per cent to £2.4bn during a "challenging" 2016/17 financial year for the former state monopoly.
The roles will mainly cover managerial and back office areas, with the company expecting to shave off £300m over two years. This comes a day after industry sources were speculating about a possible sell-off of the Global Services unit. Its shake-up of the unit follows an accounting scandal in Italy which led to a £530m writedown, impacting the company’s bottom line. The incident has also wiped £8bn off BT’s share price.
Following a strategic review of Global Services, there will be a two-year restructuring of its operations to "create a simpler and leaner" operating model, said the company today.
BT today announced that Bas Burger is to become chief exec of Global Services from 1 June, replacing Luis Alvarez who has decided to leave BT after nearly five years as chief exec, Global Services and 18 years with the company.
Full-year revenue up 24 per cent to £24.1bn, mainly as a result of the contribution of EE and foreign exchange. Underlying revenue remained flat.
Financially it has been a challenging year for BT, in addition to the Italian business write-down, it has faced regulatory costs for the year of £479m, including record £342m fines associated with its historic failure to compensate Ethernet customers. Integration costs of EE were £215m for the year. The company said it will review repayments associated with its ballooning £9bn-£14bn pensions deficit this summer.
BT Group chief exec Gavin Patterson and outgoing Group finance director Tony Chanmugam will not receive a bonus. Patterson’s basic salary for the year was £993,000. In 2015/16 he received a bonus of £1m.
The Remuneration Committee chairman, Tony Ball, said the past year has been "challenging". He said: "Unfortunately our performance has been significantly affected by the accounting irregularities in our Italian business, the issues that arose in Openreach around [the system of] Deemed Consent and the significant challenges we faced in the UK public sector and international corporate markets.
Patterson said: “This has been a challenging year for BT. We’ve faced headwinds in the UK public sector and international corporate markets and must learn from what we found in our Italian business. Openreach also received a fine from Ofcom after an investigation into historical Deemed Consent practices revealed it fell short of the high standards we expect.
"We take these issues extremely seriously and are putting in place new measures, controls and people to prevent them happening again. Learning from the challenges of this year will make BT a stronger company for the future."
It is the first time the company has posted results since agreeing to make its broadband division a legally separate entity.
Openreach said it will consult with its 580 communications providers on building the investment case for a large-scale "full fibre" network and bringing faster broadband speeds to "not-spots" which can only order less than 10 Mbps services today.
Clive Selley, chief executive of Openreach said: “With the right conditions we could make full fibre connections available to as many as 10 million homes and businesses by the mid-2020s, but we need to understand if there’s sufficient demand to justify the roll-out, and support – across industry, Ofcom and government – for the enablers needed to build a viable business case.” ®