BT Wireless to cut 1,500 workers after demerger

BT Wireless, the mobile phone arm of British Telecommunications, is preparing to reduce its workforce by about 10 per cent as the growth in subscriber numbers begins to slow.

The mobile division, which employs 15,000 people, is being slimmed down ahead of its demerger from BT, scheduled for November.

BT Wireless's loss-making German arm, Viag Interkom, has already introduced a hiring freeze. Its Irish and Dutch operations are also expected to reduce numbers through voluntary redundancies and by not replacing employees who leave or retire.

Even BT Cellnet may end the financial year in March 2002 with fewer employees than a year previously.

"There is always natural wastage," a BT insider said yesterday. "The wireless business has seen very rapid growth in subscriber numbers in the last few years and now that market is showing increasing maturity."

"We have said that the business is going to be managed to be profitable."

BT Wireless's headcount is likely to be reduced by about 1,500. While the company is not ruling out compulsory redundancies in some areas, it is not believed to have drawn up a restructuring plan involving widespread lay offs.

BT begins a series of City roadshows to promote interest in its mobile business next week. The demerger prospectus is due out at the start of October.

Its mobile unit has 16.2 million subscribers in the UK, Ireland, Germany and the Netherlands. It recorded an underlying profit of £64m in the three months to June, down from £116m.

Total sales were just 1 per cent higher in the UK, Europe's most mature mobile market.

BT is shedding 6,000 jobs across the group through natural wastage and voluntary redundancies this year as part of its efforts to reduce debt, which stands at about £16bn.

It is expected to load approximately £2bn of that debt on to the demerged BT Wireless.

BT moved yesterday to dampen speculation over the future of Sir Peter Bonfield, the group's chief executive. He has another 16 months to run on his existing contract but is said to be considering leaving at the end of this year to move to the US.

A BT spokesman said Sir Peter was not negotiating to depart early and dismissed the suggestion that he plans to announce his departure in November as "yet more speculation".

Sir Peter stands to win a terminal bonus of £820,000 – equal to a year's salary – if he stays until December 2002.