BT disclosed yesterday that 8,000 employees had taken voluntary redundancy last year at a cost of pounds 421m. Since 1992, staff numbers have fallen by 125,000 at a total cost to BT of pounds 2.9bn, making it the costliest restructuring by a private company in British corporate history.
The average cost per redundancy last year was pounds 52,625 against pounds 44,324 in 1994 and pounds 23,200 in the four years since the programme was launched.
Sir Iain Vallance, chairman, said BT expected to shed a further 8,000 jobs this year, taking the workforce down to just over 120,000 compared with 255,000 in 1992.
He was speaking as BT unveiled a 13 per cent increase in pre-tax profits for last year to just over pounds 3bn despite suffering an annual fall in residential line numbers for the first time.
The net reduction in residential lines was 113,000. However, turnover rose by 2 per cent to pounds 14.5bn as growth in overseas operations, business lines and the mobile telephone arm Cellnet more than compensated for pounds 500m of price reductions.
Sir Iain said BT had terminated its pounds 33bn merger talks with Cable & Wireless with "a tinge of regret" but made it clear the decision had been taken on price. "Given the premium that would have been expected, the risks outweighed the returns."
Despite the collapse of the merger talks and a reduction in BT's gearing to 8 per cent, he said it had no plans to launch a share buy-back or pay shareholders a special dividend. BT said it was not opposed in principle to such a move but borrowing money to hand back to shareholders did not make sense.
Sir Peter Bonfield, chief executive, indicated instead that BT would spend its money expanding further into Europe and the Asia Pacific. It is bidding for full fixed and mobile telecommunications licences in four European countries and is hopeful of finding a partner in France ultimately.
Sir Peter refused to be drawn on whether he expected to reach agreement on a new price control with the industry regulator, Don Cruickshank.Reuse content