BT is to axe 4,000 back-office and managerial jobs and has cut its profit and dividend forecasts after a difficult year, which included an accounting scandal in Italy.
The Italian scandal wiped £8bn off the company’s share value and led to a 37% fall in third-quarter profits. Fourth-quarter profits were down even further at 48%, with a fall of 19% for the year as a whole, leaving annual profits before tax at £2.35bn.
As a result BT group chief executive Gavin Patterson and outgoing group finance director Tony Chanmugam will not receive a bonus for the 2016-17 financial year, with Mr Patterson’s overall pay dropping from £2.8m to £258,000.
The job losses are expected to save £50m as BT tries to adapt to the changing marketplace.
As well as the Italian accounting scandal, BT was also fined a record £42m by UK regulator Ofcom and ordered to pay £300m in compensation for ‘serious failings” in its wholesale Openreach division.
On a positive note, over the past financial year BT managed to persuade Ofcom not to compulsorily hive off Openreach, and completed a successful £12.5bn acquisition of UK mobile phone operator, EE, giving it 35% of the mobile consumer market.
Commenting on the results, chief executive Gavin 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.