BT deciminates workforce

BT plans to decimate its employees, sacking 10% of its 150,000 strong workforce after its Global Services business  took it into a heavy Q4 loss.

The telco reported a pre-tax loss of £134 million for the year to March 31, compared with a pre-tax profit the previous year of £1.976 billion. The losses being racked up at BT Global Services are now in excess of £2.04 billion and the carrier's net debt has grown from£9.46 billion to £10.36 billion.
 Overall BT revenues are expected to fall by between 4 and 5% over the course of the current financial year.

BT had to take a £280 million writedown – believed to include the NHS -  on the back of Global Services performance and will have to spend another £420 million over the next two financial years on yet more restructuring of the unit.  BT's chief executive Ian Livingston said: “he important thing is to make Global Services a better business."



A previous headcount cull wiped 15,000 jobs off the company's payroll but mostly in the form of contract employees. The latest round of cuts will see another 15,000 heads go, but this time around a third of the losses will be at Global Services itself.



The Communication Workers Union (CWU) blamed the previous management of Global Services for the latest cuts. Andy Kerr, the deputy general secretary of the CWU, said: “Global Services is a disaster. Staff at BT are paying the price for the chronic mismanagement of Global Services.”

“It's the write-down of £1.639 billion in the year that is the immediate concern,” reckoned David Molony of analyst firm Ovum. “It is speculated that the write-downs are from two accounts. BT emphasised that these costs have already been incurred and therefore there is limited impact on the free cash flow of the business. In response to the weak financial performance, BT announced that this year there will be a similar level of job cuts as last year, which ended up at around 15,000.

“BT announced a restructuring of Global Services into UK Domestic (with 1,100 customers, revenues of £2.5 billion and EBITDA of £0.4 billion) led by Mark Quartermaine, MNC business (revenues £3.5 billion, 400 customers and EBITDA of £0.2 billion) led by Michael Boustridge, and GS Enterprise, a portfolio of non-UK businesses specialising in domestic telecoms and professional services to corporates and the public sector within their domestic markets (revenues of £2.8 billion and EBITDA of £0.2 billion) led by Luis Alvarez. The appointments are all strong ones in our opinion, with Quartermaine previously leading public sector, Boustridge the US and Alvarez the European and Latin American leads.

“The creation of the BT Global Services Enterprises unit offers a more locally driven portfolio. Other operators are not doing this and we will need to understand the impact on global delivery capability, but we understand that MNCs and UK Domestic will continue to be serviced in the same way as they were before. The regional focus also extends to systems - for example, the business has given up on one single global billing platform. I In addition, £200 million of business is being transferred from BT Global Services to BT Business (Retail), which further emphasises the more localised approach of the business.”

But he warned that there were difficult times ahead. “Whilst there are many good things under way in the internal programmes, the customer buy-in to the BT Global Services proposition, which has been the secret of its success to date, is at risk whilst it transitions its business,” he said. “That said, it continues to win business and we believe that most existing customers will remain with BT Global Services and stand by the company whilst it tidies up its house.”