Water shares rally as United Utilities cuts 1,000 jobs, holds dividend and prepares telecom float

UNITED UTILITIES, owner of North West Water and Norweb, is to reduce its workforce by 1,000 as part of a plan to save pounds 400m over the next five years.

News of the latest round of job cuts to hit the sector came as United Utilities prompted a rally in water shares by raising its dividend and announcing plans to float its telecoms arm, Norweb Telecom, in 12 - 18 months.

Shares in the company rose 68p to 550.5p as the City breathed a sigh of relief that United Utilities had not followed the lead of Hyder and Pennon by cutting its dividend.

United Utilities said it had decided not to appeal against Ian Byatt's water price curbs or Ofgem's cuts in electricity charges, even though the two reviews will cut profits by pounds 140m next year.

The headcount reduction will be achieved by implementing about 500 voluntary redundancies and outsourcing a similar number of jobs.

John Roberts, United Utilities' new chief executive, would not comment on the job cuts, saying the company would set out its plans in detail on 1 February. He stressed, however, that job losses would contribute only a small amount towards the pounds 400m in efficiency gains. United Utilities calculates, for instance, that it will save pounds 100m by integrating back- office functions with its operational activities and pounds 30m by rationalising its property portfolio.

The company has 6,000 workers in its core regulated UK water and electricity businesses. The target of reducing operating costs annually by pounds 80m in each of the next five years is equivalent to a 25 per cent cut in its controllable costs. United Utilities has already reduced its operating costs by pounds 90m a year since the merger of North West Water and Norweb in 1996.

Norweb Telecom has about 1,000 corporate customers and made operating losses of pounds 3.2m on sales of pounds 37m in the six months to the end of September. The business is reckoned to be worth about pounds 1bn, but a flotation could value it at pounds 1.5bn.

United Utilities' shares were boosted by reports it had been targeted by Enron, the US owner of Wessex Water, for a reverse takeover. The magazine Utility Week said United Utilities would have bought Enron's water subsidiary, Azurix, for up to $2.4bn (pounds 1.5bn) through an all-share offer, but Enron had switched its attention and was now looking to buy Hyder, owner of Welsh Water and Swalec.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Arts and Entertainment
Frank Turner performing at 93 Feet East
musicReview: 93 Feet East, London
News
Toronto tops the charts across a range of indexes
news

World cities ranked in terms of safety, food security and 'liveability'

Extras
indybest
Voices
A mother and her child
voices
Voices
The veterans Mark Hayward, Hugh Thompson and Sean Staines (back) with Grayson Perry (front left) and Evgeny Lebedev
charity appealMaverick artist Grayson Perry backs our campaign
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee