BT says it plans to simplify operations in its Global Services division and that the job losses will be focused mainly in the management and back office sectors. The changes follow a significant accounting fiasco in the Italian segment of Global Services, which saw BT take a hit of more than £500m.
Part of the fallout of this event will be that Gavin Patterson, the CEO of BT, and Tony Chanmugam, the former chief of finance who has now left the organisation, will lose their bonuses.
BT added that Patterson and Chanmugam backed this decision and would not have taken their bonuses had the board approved them. BT’s annual report for 2016 states that Patterson’s base salary was £969,000 and his bonuses totalled more than £4m.
In January this year, BT had to write down the value of its Italian segment after several years of its profits being overstated. Luis Alvarez, the leader of Global Services at BT, is also being replaced; the new head is Bas Burger.
It had already been reported that another executive at Global Services, Corrado Sciolla, will be leaving his role. Sciolla was the head of Continental Europe.
BT says that it wanted to make a number of changes at Global Services. The telecoms giant hopes to be able to reposition Global Services and turn it into a more focused and efficient digital operation. By focusing more on technology, BT could reduce its need to own physical assets and network infrastructure in different countries around the world.
BT announced these changes in conjunction with revealing that the company’s annual profits before tax had slipped by 19% to £2.35bn for the year ending in March. In reaction to this, the share price of BT fell by more than 1.5% on the London Stock Exchange.
BT further commented on its overhaul, saying that the past year had been extremely challenging; however, the company is in a good position to meet fresh challenges in the future. BT is a company with a broad scope, strong underlying performance, strong business divisions, and past indicators of financial performance; therefore, it has the resilience to weather obstacles and any setbacks.
The organisation added that the profit figures were close to those predicted in January and that the company intended to reward shareholders with more generous dividends in the future.
A market analyst commented that there is not a lot of cheer in BT’s earnings report for the full year, with the company appearing to be moving cautiously and not expecting a great deal of improvement in its earnings over the coming year.
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