BT Cuts 4,000 Jobs and CEO Bonus as Profit Falls -- 2nd Update
BT Group PLC, reeling from an accounting scandal at its Italian business and other issues, said Thursday it would cut 4,000 jobs and pay no bonus to its chief executive.
The telecommunications and television provider, one of the U.K.'s best-known companies, said the moves come as it accelerates cost cuts in areas including global services, which provides communications services to businesses around the world.
BT shares were down 3% in morning trading in London.
The global-services business includes BT's Italian operations, which were responsible for a GBP530 million ($684 million) write-down after the discovery of yearslong "improper" accounting practices and transactions. They led to the suspension of several executives who have since left the business.
Chief Executive Gavin Patterson said a review of global services found BT no longer needs to own so many assets around the world. Global services accounts for nearly a quarter of BT's revenue, with the rest mainly coming from fixed-line, cellphone, internet and TV services in the U.K. BT owns much of the U.K.'s telecommunications infrastructure, a legacy from being the state-owned telecom monopoly until the 1980s.
The company said Mr. Patterson and outgoing finance director Tony Chanmugam won't receive a bonus for the year ended March 31. The pay decision followed the problems in Italy in addition to issues related to the U.K. infrastructure business Openreach and other challenges, the company said.
Mr. Patterson will receive GBP1.3 million for the period, down from GBP5.3 million the previous year, while Mr. Chanmugam's total payment falls to GBP258,000 from GBP2.8 million.
BT said it also will wring savings out of the technology, services and operations division, which operates its networks, platforms and information-technology systems.
The company reported pretax profit of GBP440 million in the three months to end-March, down 48% from GBP845 million in the same period the previous year, on a 9.9% rise in revenue to GBP6.12 billion.
The final dividend rises 10% to 10.55 pence a share. BT said dividend growth will be lower in the current year.
BT also trimmed its current-year forecast for earnings before interest, taxes, depreciation and amortization to a range of GBP7.5 billion to GBP7.6 billion, against a previous prediction of around GBP7.6 billion.
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(END) Dow Jones Newswires
May 11, 2017 06:32 ET (10:32 GMT)