LONDON (Alliance News) - BT Group PLC said Thursday it will cut 13,000 back office and middle management jobs as part of a broader restructuring plan to save GBP1.5 billion over the three years and invest GBP3.7 billion in improving mobile infrastructure.
The company also plans to hire 6,000 new employees in network deployment and customer service divisions which means the restructuring will lead to 7,000 net job cuts.
BT shares were trading 8.4% lower at 218.50 pence early Thursday, the worst faller in the FTSE 100 index.
As part of the restructuring, the company also plans to open 30 new offices and leave its headquarters in central London. The plan will additionally see simplification of the company's management, increased automation for improving productivity, new digital products, and consolidation of its supplier base.
The FTSE100 listed company said it expects the GBP1.5 billion cost reductions to help offset near-term cost and revenue pressures, provide capacity to invest in value enhancing projects, and drive longer-term profit growth.
Separately, BT said it has reached an agreement with the trustee of its pension scheme over meeting its pension deficit, which stood at GBP11.3 billion on June 30, 2017. The deficit will be met over a 13-year period, maintaining the remaining period of the previous plan.
The company in the three years to March 31, 2020, will pay GBP2.1 billion. A further GBP2.0 billion contribution will be funded from bonds issue, which will be held by the pension scheme trustee. For the 10 years from April 1, 2020, to March 31, 2030, BT will make annual payments of around GBP900 million towards its pension scheme.
For the financial year ended March 31, BT recorded a pretax profit of GBP2.62 billion, up 11% from GBP2.35 billion in the year ago period, on a revenue of GBP23.72 billion and GBP24.06 billion, respectively.
Annual adjusted earnings before interest, taxes, depreciation and amortisation fell 2% to GBP7.51 billion from GBP7.65 billion.
Pretax profit for the fourth quarter totaled GBP872 million, up 98% from GBP440 million in the year ago period. Revenue fell 3% to GBP5.96 billion.
"BT delivered a solid set of financial results in the fourth quarter, with growth in our consumer divisions offset by declines in our enterprise businesses, due to both challenging market conditions and our decision to exit lower margin business," said Chief Executive Gavin Patterson.
"Our [new] strategy will drive sustainable growth in value by focusing on delivering differentiated customer experiences, investing in integrated network leadership, and transforming our operating model," Patterson added.
For 2019 financial year, BT predicts a 2% drop in adjusted revenue and adjusted Ebitda in the range of GBP7.3 billion and GBP7.4 billion. Capital expenditure is expected to total GBP3.7 billion
BT declared a final dividend of 10.55 pence for financial 2018, giving a unchanged full-year dividend of 15.4p.
BT (BT.A)