BT to cut 10,000 jobs as services group struggles

IDG News Service - LONDON - British telecom operator BT Group will lay off 10,000 workers as it seeks to cut costs and improve the profitability of its services branch, the company said today.

Most of the job cuts will come from indirect labor, such as subcontractors and offshore workers. BT has already let go 4,000 workers, and the remaining 6,000 cuts will be complete by the end of its financial year, on March 31.

BT's overall revenue increased to $7.8 billion for the second quarter that ended Sept. 30, up 4% from the same period a year prior. But operating profit before specific items and leaver costs was down 1% compared with the same quarter a year prior, to $1.1 billion.

"In today's environment and today's economy, that's not the worse result you'll see, but we were of course disappointed," said Ian Livingston, BT's CEO, in a webcasted video interview.

BT said three of its main business units -- BT Retail, BT Wholesale and Openreach -- met expectations for the company's second quarter and half-year results. But BT Global Services, which provides networked IT services to enterprises, suffered from increasing costs, which cut into its profit.

Revenue for Global Services came in at $3.1 billion for the quarter, up from $2.8 billion a year ago. But profit fell to $904 million from $937 million.

The head of Global Services, Francois Barrault, resigned from his position Oct. 30 and has since been replaced by Hanif Lalani, who was group finance director. BT said Global Services still had compelling products, citing a total of $12.4 billion in new contracts over the past year.

One of BT's major infrastructure projects, the 21st Century Network, is now serving 8% of the U.K. market with wholesale broadband services up to 24Mbit/sec. By April, BT plans to deliver those services to 40% of the market and 60% by March 2010, the company said.

BT also cited progress with its fiber-optic broadband program, even though the U.K. has been relatively slow in installing faster broadband infrastructure. BT is installing fiber to homes in Ebbsfleet, a city east of London, that can theoretically handle speeds up to 100Mbit/sec.