BT Group PLC (LON:BT.) is cutting 13,000 managerial and back-office jobs and leaving its London headquarters as the UK’s biggest telecoms group launches another restructuring.
The FTSE 100-listed firm is maintaining its dividend – despite worries over a possible cut - and has agreed a new pension funding plan to provide confidence over its long-term outlook.
READ: BT dividend cut cannot be ruled out, says Morgan Stanley ahead of earnings
BT also said it will hire about 6,000 new engineers and front-line customer service staff to support its roll-out of fibre and 5G mobile networks.
The telecoms giant’s chief executive Gavin Patterson said the restructuring, which comes after a tough 2017 including an accounting scandal in Italy, would focus the firm on the essential services needed by consumers and businesses.
He commented: "This position of strength will enable us to build on the disciplined delivery and risk reduction of the last financial year, a period during which we delivered overall in-line with our financial and operational commitments whilst addressing many uncertainties.”
BT also said it has agreed a new 13-year funding plan for its pension, which had a deficit of £11.3bn at the end of June, paying £2.1bn into the scheme by 2020 and a further £2bn will be funded by the issuance of bonds.
The strategy changes came as the group also reported its full-year results showing a 3% drop in fourth-quarter revenue to £5.967bn, just missing analysts' expectations, while core earnings rose by 1% to £2.083bn.
The group is to pay a final dividend of 10.55p, giving a full year pay-out of 15.4p, unchanged from the previous year.
Shares down sharply
In early trading, BT shares dropped by over 8% at 218.65p.
Lee Wild, Head of Equity Strategy at interactive investor, commented: “Cutting 13,000 admin and middle management jobs and hiring 6,000 staff in more relevant roles, including engineers to accelerate rollout of fibre broadband, is common sense.
“Finding £1.5 billion of cost cuts and moving out of its expensive London HQ to focus on 30 fit-for-purpose hubs, is the kind of action BT shareholders have wanted to see for years.”
But, he added: “Investors need some convincing, however, if the grim response to the plan, fourth-quarter results and the pension review. BT shares are down sharply but remain cheap on most valuation models and a dividend of yield of over 6% is compensation for risk involved in making Gavin Patterson’s grand plan work.”
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