BT on target for £1bn cost savings

BT's fortunes are on the up, according to chairman Sir Michael Rake

BT chairman Sir Michael Rake has spoken about the telco's prospects in the current economic climate, claiming that the firm will emerge even stronger from the recession.

Addressing shareholders at BT's annual general meeting in London's Barbican Centre today, Rake said that BT expects to deliver well over £1bn worth of reductions in capital expenditure and operating costs, and aims to improve cash flow before pension deficit payments by over a third.

BT Retail, BT Wholesale and BT Openreach had done well in difficult economic conditions, according to Rake, but the performance of BT Global Services had been unacceptable and improvements in this division are now a priority.

Rake added that focusing on customer service and cost transformation, and investing in next-generation networks, will give BT a great chance of emerging strongly from the downturn.

The news comes as speakers at the Semicon West 2009 conference in San Francisco this week said that the recession could have a positive effect on innovation in the chip manufacturing market.

With chip demand low, those companies with the money are choosing to spend on R&D rather than on new production facilities.