BT is to cut 4,000 jobs and revamp its overseas operations, as it grapples with fresh challenges after a tumultuous year.
Chief executive Gavin Patterson will see his pay slashed and bonuses clawed back. Over the past 12 months the telecoms giant was hit by a £530m Italian accounting blackhole and forced to pay nearly £350m in fines and compensation after UK network failings.
Given such “setbacks” Patterson said: “I felt even if a bonus would be paid, I signalled that I didn’t think it would be appropriate for me to take it.”
Patterson refused to give either a geographical or segmental breakdown of the cuts. He did say a “significant chunk” will be from its global services division. Unlike previous culls, employees will not be recycled to elsewhere in the group.
Overseas operations will be restructured to focus on a digital offering rather than owning telecoms assets abroad.
Investors raised their eyebrows in the wake of January’s Italian accounting blackhole. As the second scandal to hit global services in the last 10 years, some questioned whether the time had come to sell the division. Patterson said:
We look at all parts of the business on a regular basis. We decide whether or not we are the best owner for them. In that respect it is nothing new. There is going to be a lot of change in global services.
BT hiked its dividend by 10 per cent today but said it would not grow at the same rate going forward.
The firm is facing a duo of near-term challenges: negotiations trustees over a £10bn pension scheme deficit and working out how much capital infrastructure arm Openreach needs to set aside for future investment.
The latter will be decided following a consultation with internet providers such as TalkTalk, Sky and Vodafone. BT has hired Stuart McIntosh, who previously did a similar role on behalf of regulator Ofcom, to manage the process
“We need to keep a bit of fire power back as we work through these two uncertainties,” said Patterson.
There is quite a bit of work to be done to bottom out these two issues in particular. We want to do what is right for the business in the medium to long term. As such it wouldn’t be appropriate to guide when we’re not completed resolved.
Over recent years BT has provided guidance on its dividend growth more than one year in advance. This, Patterson said, was to quell investor concerns the firm was not over-reaching in areas like TV sports spend.
I don’t see rampant inflation continuing within the sports market. I think it’s pretty saturated right now.
“We felt we needed Champions League. It was important to us,” said Patterson.
BT full-year sales were £24.1bn, in line with revised targets set in January. Reported profit before tax slipped 19 per cent to £2.4bn. Shares in the firm fell over 1.5 per cent.