BT to cut 4000 jobs in major restructuring plan

Owen Stevens
May 12, 2017

A restructuring of the unit, which employs 18,500 people, is part of Chief Executive Gavin Patterson's attempt to recover from the scandal and a profit warning caused by a slowdown in government work that together wiped 8 billion pounds ($10.3 billion) from the company's value.

The clear out follows the departure of its head of television and sport and comes at a troubled time for the business still reeling from the impact of an accounting scandal at the Italian division of its Global Services operation, which left it out of pocket to the tune of £500m. This is a 74% decrease from his £5.28million in 2016.

"The past year has been challenging", noted remuneration committee chairman Tony Ball in a separate statement.

"Learning from the challenges of this year will make BT a stronger company for the future", he said.

According to BT's 2016 annual report, Mr Paterson is entitled to a maximum annual bonus worth 240% of his £969,000 basic salary - equating to about £2.3m - while Mr Chanmugam, who departed midway through the financial year, would have been eligible for a bonus worth in the region of £1m.

BT was fined £42m by Ofcom earlier this year for "breaching contracts with telecoms providers" at its Openreach business, which connects the networks of such firms as Sky and TalkTalk to customer's homes. Changes include replacing the division's CEO, Luis Alvarez, with Bas Burger.

BT added Mr Patterson and Mr Chanmugam "understood" the committee's decision not to award a bonus and had indicated they would not have accepted a bonus should one have been approved.

"This has been a challenging year for BT".

The restructuring is aimed at "developing a more digital business, prioritising innovation on the cloud-based platforms delivering its products and services, and less dependent on owning local network". Adjusted Ebitda rose 2% to £2.07bn, above the £2.03bn average estimates.

It paid a final dividend of 10.55 pence, up 10 percent, but said dividend growth in 2017/18 would be lower than the 10 percent it had previously targeted.

"We're also accelerating and expanding our cost transformation programmes, most significantly in our central Grop Functions, in Technology, Service and Operations, as well as in several other lines of business". On a positive note, BT said it hit £150 million in annual synergies through the EE acquisition, ahead of expected £100 million.

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