BT reports first-quarter loss of £977m

BT has faced a challenging year

BT has announced its latest financial results, revealing huge losses and plans to shed some 15,000 jobs.

The telecoms giant reported a loss of £977m in the three months to 31 March, compared to a profit of £426m a year ago, putting much of the blame on " unacceptable performance" at its Global Services arm.

Over the year, BT Global Services saw management changes and wrote off two large contracts, which contributed to a loss for the unit of over £1.5bn for the quarter and around £2bn for the year. BT has promised that plans to turn the division around are well underway.

"Three out of four of BT's lines of business have performed well, in spite of fierce competition and the global economic downturn," said BT chief executive Ian Livingstone.

"However, this achievement has been overshadowed by the unacceptable performance of BT Global Services, and the resulting charges we have taken. During the year we have changed the leadership of BT Global Services and started to turn the division around."

A BT spokesman explained that management changes over the year so far would continue to have an effect on the performance of BT Global Services, adding that the firm would streamline a lot of the services it provides in a bid to save on waste.

"There will be less unnecessary bespoke design for clients, unless it is a specific part of the contract, more use of shared services and common designs, and an increased focus on sectors as opposed to geographies," he said.

"In the past Global Services has tended to reinvent the wheel for each customer. It is a case of us streamlining our operations so that we are more focused on delivering sustainable results for the wider BT group."

This tendency to over-provide has also been noticed in the analyst community.

"I think it is safe to say that there has been a general feeling in the industry that Global Services has been doing some very 'good' deals for some customers," said Charlotte Patrick, principal analyst in Gartner's carrier operations and strategy team.

"I would not like to venture an opinion on whether this is bad management or what BT had to do in order to build revenues."

BT has also announced its intention to shed 15,000 jobs, mainly from its range of contractors. "We expect further reductions of a similar level next year," the firm said. "We have sought to retain our permanent workforce through redeployment and retraining."

Overall, the entire BT Group posted a full-year loss of £83m, compared to last year's profit of £1.7bn.