BT chief loses bonus after Italian scandal

General View Of British Telecom Head Quarters

BT BT.L 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.

Current group CEO Gavin Patterson and previous group CFO Tony Chanmugam have lost bonuses as a result.

The moves - described as "difficult decisions" by the firm's remuneration committee - follow BT's accounting scandal in Italy which helped wipe billions from the company's stock market value earlier this year.

BT didn't provide guidance for the fiscal year after this one, as it historically has, given uncertainty about the cost of proposals by communications regulator Ofcom to reduce wholesale broadband prices at BT's network unit, Openreach.

BT made the announcement, which will affect "back office and managerial roles", as it revealed fourth quarter results, which saw pre-tax profit fall 19% to £440 million.

According to BT, the division was now under strategic review with the goal of making it a "more digital business".

Patterson will be paid £1.34m for the year to the end of March, mostly consisting of his annual salary of £993,000, a 74% reduction on the £5.28m he received for 2015/16.

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"The committee has made a number of hard decisions this year in light of these circumstances and exercised its discretion accordingly".

The jobs cuts would come in managerial and back office areas in a restructuring created to simplify the business, it said. Revenues rose 10 per cent to £6.1 billion.

The group's figures were hit by a £342 million Ofcom fine and related compensation payments.

"We take these issues extremely seriously and are putting in place new measures, controls and people to prevent them happening again".

Excluding one-offs and the impact of mobile network operator EE's acquisition, EBITDA (a measure of core earnings) fell 4.6% for the quarter and 2.9% for the full-year, indicating tough operating environment in "the United Kingdom public sector and global corporate markets".

"The cost savings will provide headroom to offset market and regulatory pressures and support increased investment in delivering great customer experience and leading networks", it added.

"Overall, it has been a tough year for BT", he said.