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BT bosses forfeit bonuses with 4,000 jobs to go

The Chief Executive of BT Group and its outgoing Group Finance Director have both been denied their bonuses this year as the telecoms company counts the cost of a string of controversies in the past 12 months that have dented their profit margins.

CEO Gavin Patterson and the departing Tony Chanmugam have both been denied their sizeable bonuses for the financial year 2016/17 after a review by BT’s remuneration committee. At the same time, the company has announced it is to shed 4,000 jobs over the next two years as it embarks upon a restructuring of its business.

Back office and managerial positions are set to go as it sets about simplifying its Global Services business following a challenging year for the UK giant which has seen a number of controversies batter its share price and reputation.

According to Remuneration Committee chairman, Tony Ball, both Patterson and Chanmugam said they would have turned down their bonuses had they been offered them.

Ball said: “The past year has been challenging. Although good progress has been made in a number of areas, unfortunately our performance has been significantly affected by the accounting irregularities in our Italian business, the issues that arose in Openreach around Deemed Consent and the significant challenges we faced in the UK public sector and international corporate markets.

“The Committee has made a number of difficult decisions this year in light of these circumstances and exercised its discretion accordingly.”

In March, Ofcom confirmed that it would be fining BT £42m as part of its investigation into its Openreach business, where it was accused of abusing its position as market leader by cutting late installation compensation for wholesale customers such as Vodafone and Talk Talk.

Most damaging of all was the revelations back in January that costs associated with accounting irregularities at its Italian business would almost quadruple to £530m, news which wiped £8bn off the company’s stock.

The full impact of these developments has now been revealed after BT’s pretax profits dropped by 19% for the year, while profits for the quarter were down by 48% to £440m according to their annual results.

Gavin Patterson, Chief Executive, commented: “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.

“We take these issues extremely seriously and are putting in place new measures, controls and people to prevent them happening again. Learning from the challenges of this year will make BT a stronger company for the future.”

It was not all doom and gloom for BT, however, as revenues at the firm were up by 27% to £24bn while adjusted profit for the year was also up by 5% to £3.5bn, hinting that the worst of its problems may be behind it.

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