BT is set to announce about 6,000 job cuts worldwide as it looks to rebuild investor confidence after a torrid 18 months blighted by the Italian accounting scandal and patchy financial performance.
The telecoms company is expected to announce the cuts, which amount to about 6% of its 98,000 global workforce, as part of a corporate strategy to be unveiled by its chief executive, Gavin Patterson, at BT’s annual financial results next Thursday.
The latest round of cuts, which are expected to affect managerial and back-office employees, will mean BT will have shed 10,000 jobs in the last year.
Analysts estimate that the cuts, first reported by the Financial Times (£), will ultimately save BT about £500m from its £4.7bn annual wage bill. BT declined to comment.
Patterson, whose pay package fell by £4m after the Italian accounting scandal destroyed his chances of receiving a performance-based bonus, is seeking to rebuild investor confidence. BT’s share price has more than halved in the last two years, and is down a quarter compared with a year ago.
The share price was up about 1% to 234p at lunchtime on Friday.
Last May, BT announced 4,000 jobs were to be cut, about half from its UK operation. Those cuts were forecast to save about £300m over two years.
The cuts followed problems at BT’s global services division, which provides IT and communications services to clients ranging from the BBC to Bromley council, and the accounting scandal at its Italian business, which cost £530m to clean up.
Prospect, the union representing 140,000 public and private sector workers such as engineers and managers, said it expected to be consulted and heavily involved in any job cuts programme.
“Prospect has been aware that BT may be looking to cut jobs and will be aiming to work with the company to minimise the number of employees impacted,” said Philippa Childs, the union’s national secretary. “Our priorities are to ensure that our members’ jobs and livelihoods are protected.”
Analysts at Exane BNP Paribas, in a note to investors earlier this week, referred to BT’s publication of its full-year results next week as the “day of reckoning”. Exane believes BT will also be forced to cut its dividend for the financial year by up to a third, and that job losses could be closer to 6,600.
“We think redundancies will be a key focus at the upcoming results,” said Sam McHugh, the lead analyst on the note. “Headcount reduction remains one of the key drivers of ‘value creation’ at incumbent telco operators, many of whom still have large workforces.”
BT’s last large-scale redundancies came in 2008 and 2009 when 30,000 jobs went, again largely as a result of the poor performance of its global services division.
Patterson has endured a rollercoaster 18 months that has included a record £42m fine from the regulator Ofcom over delays in installing high-speed internet connections for rival telecoms companies. Compensation payments could hit £300m.
He authorised an eye-watering £1.2bn deal to keep exclusive Champions League rights, an increase of a third on BT’s current deal, as the popularity of its BT TV service began to wane.
Patterson then called an end to the expensive strategy of trying to outgun Sky for the prime Premier League TV rights in the latest auction – settling for a “viable second”, bringing to an end years of spiralling rights inflation that has cost both sides billions.
While BT is in the process of cutting staff, its standalone subsidiary Openreach, which is responsible for building and managing most of the UK’s broadband infrastructure, is on a massive recruitment drive.
In February, Openreach said it intended to create more than 3,500 engineering jobs this year as part of a plan to speed up the rollout of fibre broadband and eliminate “not-spots” in cities and suburban areas.
Kicking off a drive to upgrade the UK to next-generation gigabit-speed internet, Openreach said it would recruit and train the engineers in order to reach its new target of 3m homes and businesses by 2020.
