British Telecom says it should have acted sooner to cut Concert costs
BT says it should have acted sooner to cut costs at Concert.
Chief executive Peter Bonfield says he regrets that BT and its partner AT&T were forced to scrap Concert, but changes in the market left the company with no choice.
Between 800 and 1,000 of the 2,300 job losses will be in the UK and most of these will be in London and the South East.
Mr Bonfield says: "What we did not anticipate was the huge reduction in pricing as a huge amount of capital went into international traffic. We did not take out costs fast enough in Concert."
Concert was expected by BT to lose £550m in the current year but analysts estimate the venture was running up losses of around £20m a week.
Mr Bonfield adds: "We regret the outcome but, on all these things, you have got to see how the market moves."
BT will take a £1.2bn charge in order to unwind Concert in the third quarter of the year. This includes a £300m write-off of BT's share of Concert's goodwill, and an £825 million write-down of fixed assets, mainly sub-marine cables.
BT will take £200 million in exceptional charges resulting from its share of redundancies and transition costs.
The company will save itself up to £725m by getting out of an obligation to invest in AT&T Canada before June 30, 2003.
Finance director Philip Hampton says the decision will also mean a big reduction in capital expenditure on new telecom equipment. BT's share of investment in the joint venture was running at about £500m a year.
