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British Telecom feels the pain

British Telecom has today announced third-quarter figures which are down nearly 50% on the corresponding period last year. The company has been hit by reduced spending from most multinational companies and government departments as well as problems with the growth engine room which is the Global Services Division. As a consequence the company is looking to introduce an additional £500 million worth of cost cuts in the short to medium term bringing the total expected cost reductions to £1.5 billion in the current year.

The ongoing cost-cutting exercise has seen 15,000 jobs lost this year and the company is set to increase this figure in the medium term as competition in the telecoms industry continues to grow. While progress has been made in other areas of the company it is the problems with the Global Services Division which have grabbed the headlines. The fact that the recent and ongoing cost-cutting programme has allowed the company to increase the interim dividend by 5% will not go down well with unions and workers although it is difficult to find a balance between shareholder interests and employee interests.

British Telecom still remains one of the major forces in the telecoms industry although more focus and more cost-cutting would appear to be the way ahead.

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