Troubled by its Italian accounting scandal, that lasted for at least 18 months, BT is attempting to rebuild investor confidence and is all set to announce job cuts to the tune of about 6,000 globally. The company has also been performing poorly financially.
The company is set to unveil its new corporate strategy by its chief executive Gavin Patterson and the job cuts are part of the restructuring process. the proposed job cuts account for about 6 per cent of the 98,000 global workforce of the company. the announcement is expected to be made next Thursday at the annual general meeting of the company.
About £500m from its £4.7bn annual wage budget is expected to be saved by the company from the job cuts. For the company head also there has been a drop in the pay package by £4 million following the Italian accounting scandal that negated all chances of Patterson getting a performance-based bonus. These measures are aimed at increasing investor confidence. The share price of BT has reduced and is now a quarter compared with a year ago and it has more than halved in the last two years.
About half from its UK operation – 4,000 jobs were announced to be cut by the company last May expected to provide the company with a savings of about £300m over two years.
The accounting scandal at its Italian business that resulted in a £530m settlement and problems at BT’s global services division, the provider of IT and communications services to clients who range from the BBC to Bromley council, preceded the cuts.
The trade union that represents about 140,000 employees in the private sector such as engineers and managers – Prospect, has demanded that it be before the cuts are to be made and wants to get completely involved in the retrenchment process.
“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.”
The “day of reckoning” is how the BT’s publication of its full-year results next week was described by analysts at Exane BNP Paribas in their notes to investors. The job losses could be near the 6,000 mark at BT and there will be a cut in the dividends to be cut by a third for the entire fiscal year by BT, believes Exane.
“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.”
(Adapted from TheGuardian.com)