The UK telecoms conglomerate BT Group is clawing back management pay and eliminating 4,000 jobs as it seeks to rebuild investor confidence and overhaul the division involved in an accounting scandal in Italy.
The cuts involve scrapping bonuses for chief executive Gavin Patterson and former chief financial officer Tony Chanmugam for the 2017 fiscal year, BT said on Thursday as it released fourth-quarter results that narrowly beat analysts’ estimates. The company also reduced its outlook for 2018 normalised free cash flow and dividend growth.
Shareholders have been pushing the former British phone monopoly to adjust executive pay after it revealed in January that accounting irregularities in its Italian business were worse than expected, leading to a larger writedown and contributing to a reduced profit outlook. The scandal added to investor concerns over regulatory, investment and competitive pressures for BT, making it one of the worst-performing stocks in the FTSE 100 this year.
“I felt it was inappropriate to take a bonus,” Mr Patterson said on Thursday immediately after the results. Shareholders have been supportive in a challenging year, he said.
Mr Patterson would have had the opportunity to earn a bonus of as much as 240 per cent of his salary of £993,000 (Dh4.6 million) in fiscal 2017. A reduction in deferred bonus plan share awards for the two executives totals more than £500,000.
The 4,000 job cuts will come from global services and BT’s technology, service and operations unit and the company will face a restructuring charge of about £300m over the next two years, BT said. The carrier has more than 100,000 employees.
The weaker financial outlook included a 10 per cent reduction in the estimate for normalised free cash flow in the 2018 fiscal year, to £2.7bn to £2.9bn. Underlying sales will be broadly flat. Adjusted earnings before interest, taxes, depreciation and amortisation will be slightly lower, at a range of £7.5bn to £7.6bn. Dividend growth is now forecast to be lower than the 10 per cent or more previously expected.
“There are a couple of things that we need better visibility on before we can guide beyond the next 12 months,” Mr Patterson said. Additional fibre investment “could be a significant number” and would have a long payback period, he said.
Revenue in the three months ended March 31 increased 10 per cent to £6.12bn, beating the £6.03bn average of five analysts’ estimates compiled by Bloomberg. Adjusted Ebitda rose 2 per cent to £2.07bn, above the £2.03bn average estimates.
* Bloomberg
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COMPANY PROFILE
Name: Mamo Year it started: 2019 Founders: Imad Gharazeddine, Asim Janjua Based: Dubai, UAE Number of employees: 28 Sector: Financial services Investment: $9.5m Funding stage: Pre-Series A Investors: Global Ventures, GFC, 4DX Ventures, AlRajhi Partners, Olive Tree Capital, and prominent Silicon Valley investors. OPTA'S PREDICTED TABLE
1. Liverpool 101 points
2. Manchester City 80
3. Leicester 67
4. Chelsea 63
5. Manchester United 61
6. Tottenham 58
7. Wolves 56
8. Arsenal 56
9. Sheffield United 55
10. Everton 50
11. Burnley 49
12. Crystal Palace 49
13. Newcastle 46
14. Southampton 44
15. West Ham 39
16. Brighton 37
17. Watford 36
18. Bournemouth 36
19. Aston Villa 32
20. Norwich City 29
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In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
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At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
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Company Profile
Name: JustClean
Based: Kuwait with offices in other GCC countries
Launch year: 2016
Number of employees: 130
Sector: online laundry service
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How much of your income do you need to save?
The more you save, the sooner you can retire. Tuan Phan, a board member of SimplyFI.com, says if you save just 5 per cent of your salary, you can expect to work for another 66 years before you are able to retire without too large a drop in income.
In other words, you will not save enough to retire comfortably. If you save 15 per cent, you can forward to another 43 working years. Up that to 40 per cent of your income, and your remaining working life drops to just 22 years. (see table)
Obviously, this is only a rough guide. How much you save will depend on variables, not least your salary and how much you already have in your pension pot. But it shows what you need to do to achieve financial independence.
