* Will restructure GS division behind Italy scandal
* Chief executive misses out on bonus
* Not enough clarity to guide on earnings for 18/19
* Reins in dividend growth policy
(Adds shareholder reaction)
By Paul Sandle
LONDON, May 11 BT will cut 4,000 jobs and
replace the boss of its global services business in a plan to
tackle the source of an Italian accounting scandal that stunned
Britain's biggest telecoms group in January.
A restructuring of the unit, which employs 18,500 people, is
part of Chief Executive Gavin Patterson's attempt to recover
from the scandal and a profit warning caused by a slowdown in
government work that together wiped 8 billion pounds ($10.3
billion) from the company's value.
Seeking to draw a line under the difficult year, Patterson
did not get a bonus, meaning his total pay package fell in the
2016/17 financial year to 1.3 million pounds, down by 4 million
pounds on the year before.
The company said it would also claw back previous awards
worth around 338,000 pounds.
"This has been a challenging year for BT," Patterson said.
"We've faced headwinds in the UK public sector and
international corporate markets and must learn from what we
found in our Italian business," he added.
Setting out its plan for Global Services, the company said
it no longer needed to own local networks outside Britain to
serve its multinational and government customers, and could
instead use new network technology and partnerships.
Luis Alvarez, the boss of global services for the last five
years, would be replaced by Bas Burger, who was most recently
president of BT in the Americas, the company said.
"We wanted to make sure we had clear leadership to take us
through this next period of the journey (and) we felt it was the
right thing to do to make a change," Patterson told reporters.
The discovery of a 530-million-pound black hole in its
Italian accounts had stunned the market and forced BT to cut
forecasts for the next two years. As it scrambled to assert
control, it appointed Alvarez to take direct responsibility for
the European business.
DIVIDEND GROWTH TO SLOW
BT reported broadly flat underlying revenue for the year to
the end of March of 24.1 billion pounds and underlying earnings
of 7.65 billion pounds, in line with guidance it cut in January.
For the current 2017-18 year, BT forecast that underlying
revenue would again be broadly flat and core earnings would
decline to a level between 7.5 and 7.6 billion pounds.
It increased its dividend by 10 percent, but it said its
dividend would not grow at the same rate next year.
The shares, which have barely recovered from January's
plunge, fell 3 percent on Thursday, as analysts noted a lack of
longer-term earnings guidance, breaking with past practice.
Richard Marwood, senior fund manager at shareholder Royal
London Asset Management, told Reuters he welcomed the move on
executive pay and the fresh scrutiny of Global Services, a
division that has sparked profit warnings in the past.
"BT is still a business that is generating a lot of cash
flow, it's just that the demands on that cash flow have proved
to be quite high" he said.
"The dividend is the disappointment in today's statements."
Patterson said he needed more clarity on changes regulator
Ofcom has proposed to the pricing of some of the most popular
superfast broadband services before he could offer a view on
He also needed a clearer picture on any additional
investment in fibre to the home. BT has said it will connect 2
million homes with full-fibre by 2020, but it still lags many
other countries in Europe.
($1 = 0.7740 pounds)
(Additional reporting by Kate Holton; Editing by Keith Weir)