BT rings change as 4,000 jobs go

BT GROUP is axing 4,000 jobs, cutting its CEO’s pay and scaling back future dividend payouts after a year in which it was rocked by an accounting scandal at its Italian operations.

The telecoms giant, which earlier this year was also fined a record £42million by regulator Ofcom over delays installing high-speed cables, expects to save £300million over two years by slimming down its 102,000 global workforce.

It would not say how many UK jobs are at risk, but insisted the roles affected would be back-office and managerial.

Chief executive Gavin Patterson, pictured, will not receive a bonus this year, meaning his total pay package fell to £1.34million from £5.28million. The company is also clawing back previous awards to him of £338,398, while its poor shareprice performance means the level of the incentive share plan award for this year has been cut from 400 per cent to 350 per cent of salary.

BT is also shaking up its global services business. CEO Luis Alvarez is stepping down after nearly five years to be replaced by Bas Burger, who has been in charge of BT’s Americas operations.

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 [BT’s network business] received a fine from Ofcom after 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.”

BT’s annual pre-tax profit fell 19 per cent to £2.35billion on 27 per cent higher revenue of just over £24billion. Its final dividend is increased by 10 per cent, but the rise will be lower this year to enable the company to make further investment. Shares fell 14p to 297¾p.

George Salmon, equity analyst at investment firm Hargreaves Lansdown, said: “BT has got several millstones hanging around its neck, not least the huge debts taken on to acquire EE and its sizeable pension deficit, which is due for a funding review in June.

“In addition, compensation relating to malpractice at Openreach is set to drain another £300milllion from the coffers this year, so one has to wonder how progressive the new dividend policy can be.”