BT Job Cuts

BT is expected to cut thousands of jobs worldwide at its Global Services division as the group announced a profit warning.

BT Global Services, which employs 37,000 people worldwide, was expected to produce a margin of 10.9pc for the 2008 to 2009 financial year. However, a margin of between 7 and 8pc is now expected. The telecoms group declined to comment on the extent of job cuts, although expectations are that they will roll into the thousands as the group seeks emergency efficiencies.

The news of the problems at its global services division sent shares in the former phone monopoly plunging as much as 29pc and they were down 25pc at 106.7p by late morning.

In July BT said it expected sales, earnings before interest, taxes, depreciation and amortization, and earnings per share would all increase this year.

But after delays in delivering cost cuts and a drop in demand from UK business customers in the global services business, earnings for the whole company will be dragged down. The head of the troubled division, Francois Barrault, has resigned and will be replaced by BT finance director Hanif Lalani.

"We acknowledge that the performance in this part of the group is unsatisfactory and are committed to taking decisive action to rectify the situation,'' said BT chief executive Ian Livingston, who took over from long-standing chief Ben Verwaayen earlier this year.

The company plans to speed up the delivery of cost cuts in the global services unit, and set new goals for savings once those are achieved.

Revenue this year will rise, and the rest of its business is performing "in line with or ahead'' of forecasts, BT said, but there will be a "small decline'' in Ebitda for the year.

In the second quarter, which ended on Sept 30, Ebitda in the global services business was about £120m, "significantly'' below forecasts, as a result of the problems achieving cost cuts. Revenue in the division rose 15pc.

Source: Telegraph, 31st October, 2008

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