BT sees profits dive as it cuts 4,000 jobs and chief's bonus after a 'challenging' year

BT said it has suffered a "challenging year" that saw its profit slump by almost a fifth and will see 4,000 jobs lost as part of a major restructure.

Britain's largest telecoms operator said its pre-tax profit dived 19% to £2.3bn in the year to the end of March compared to 12 months ago, as it suffered a £530m accounting scandal in its Italian business and paid a sizeable fine to its regulator for breaches at its Openreach business.

Chief executive Gavin Patterson and its former finance director Tony Chanmugam both saw their bonuses cut as a result of the Italian scandal.

Patterson's total pay for the year dropped to £1.3m from £5.3m in the previous year while Changmugam, who left last year, saw his pay fall to £258,000 from £2.8m.

BT said jobs will be axed as it restructures its global services unit over the next two years, at an estimated cost of £300m. This unit handles big business accounts around the world.

The business said it wanted to "reposition global services as a more focused digital business", as technology trends meant it was less dependent on owning physical network assets around the world.

The group was forced to write down the value of its Italian unit in January after years of overstating profits.

BT was fined £42m by Ofcom earlier this year for "breaching contracts with telecoms providers" at its Openreach business, which connects the networks of such firms as Sky and TalkTalk to customer's homes. It will have to pay around £300m in compensation to companies that use Openreach.

Paterson said: "This has been a challenging year for BT. We've faced headwinds in the UK public sector and international corporate markets and must learn from what we found in our Italian business.

"Openreach also received a fine from Ofcom after an investigation into historical Deemed Consent practices revealed it fell short of the high standards we expect."

ETX Capital senior market analyst Neil Wilson added: "It's been a pretty torrid time for BT management and shareholders of late and there is not a lot of good news in today's full-year earnings report. A run of bad news means BT is still cautious and it expects little improvement to earnings and free cash in the coming year."