BT Global Services takes £1.5bn hit

BT has said it will cut another 15,000 jobs this year, equivalent to 10% of its UK workforce, as it reported an annual loss of £134m.

The job losses follow 10,000 previously announced. So far, the axe has fallen on contractors and agency staff.

BT’s problems centre on its Global Services Unit, the division responsible for its NHS IT contracts. BT said it had taken a near £1.5bn write-down at this unit, which is now being restructed at a cost of £700m.

There will be an initial £280m restructuring charge, with further restructuring charges of £420m over the next two years.

The write-down follows a review of all the corporate IT services contracts held by the division. Problems at Global Services are said to centre on the contracts with the NHS and Reuters.

BT admits it has overestimated the profitability of many of its largest IT contracts and has been forced to write-down their value by hundreds of millions of pounds.

"Three out of four of BT’s lines of business have performed well in spite of fierce competition and the global economic downturn," said BT chief executive Ian Livingston.

"However this achievement has been overshadowed by the unacceptable performance of BT Global Services and the resulting charges we have taken."

The firm also said that it would be making pension contributions of £525m in each of the next three years.

In its annual report the company said of its NHS contracts: “We continue to make progress on our NHS National Programme for Information Technology (NPfIT) contracts.”

The company said that the contract covering work in London had been extended to take over the running of IT systems at eight acute hospitals in the South of England, where BT will also implement systems in a further four acute trusts.

The company added: “We will also implement 25 new systems in community and mental health trusts in the region, building on our success in London, where the roll out is now 70% complete.”