Near the bottom

14 May 2009 By Una Galani Follow @ugalani

The British telco reckons a £1.3bn charge on Global Services will be the last. BT will restructure the sick unit. It’s also mulling a faster rollout of fibre and will pay a shrunken dividend. But the pension review isn t finished; the outcome could yet spook investors.

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BT on May 14 announced a further £1.3bn writedown relating to its troubled Global Services unit and cut its full year dividend by more than half as it reported fourthquarter results.

The British fixedline telecom operator incurred a total £1.6bn in charges due to Global Services during the year. Full year free cash flow fell 51% to £739m, compared to the previous year.

BT also agreed to increase its annual pension deficit contributions to £525m over the next three years, up from the present average contribution of £280m over ten years agreed in 2005. BT's gross pension deficit stood at £4bn as at March 31.

The crucial final outcome of BT's triennial pension review, which could affect the operator's future pension contributions, will be delayed pending further discussions of the underlying assumptions and basis of the valuation with the trustees and regulator.

BT reduced its total labour resource by 15,000 in 2008, and said it expects a similar level of reductions next year.

BT shares fell nearly 4% in early trading.

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