BT to cut costs by £600m

British Telecom's battle to win back the confidence of its investors will include a major cost-cutting programme to shave about £600m off its operating budget.

BT's new chairman Sir Christopher Bland has ordered the cost-cutting and is expected to brief investors on the plan this week, according to the Sunday Business newspaper.

Sir Christopher Bland has ordered the cost-cutting programme

A BT spokesman confirmed the plan, adding that the company also hopes to shed 5,000 jobs this year through "natural wastage".

He said that the company had also cut 5,000 jobs last year.

The company hopes to avoid any compulsory redundancies.

Sir Christopher retains his previous position as chairman of the BBC until a successor is found.

A float for Concert

In another move to overhaul its strategy, BT is considering the option of creating a new telecom company in conjunction with the US telecom giant AT&T.

The new company would combine Concert - BT's global telecom joint venture with AT&T - and BT's Ignite unit, which provides broadband services, according to the Sunday Telegraph newspaper.

There has been no decision on the way forward

BT spokesman

The company, which would also include AT&T's own business services division, would be floated on the stock markets in London and New York with an estimated value of £5bn.

The BT spokesman acknowledged that the plan is one of a dozen options being considered by the company.

He also said BT is mulling a downsizing of Concert. "There has been no decision on the way forward," he added.

Concert's performance has been disappointing, as was shown when BT reported a £2.8bn ($4bn) pre-tax loss for the fourth quarter.

Concert racked up a loss of £89m after a previous profit of £69m.

BT, which has a 50% stake in the company, is also discussing options to sell its stake in Concert to AT&T.

Possible £3m for Bonfield

Sir Peter Bonfield could earn £3m this year

Additionally, the company's beleaguered chief executive Sir Peter Bonfield has come under further criticism following reports that he could earn almost £3m this year.

The BT spokesman said Sir Peter could theoretically earn about £2.7m if he meets all of the targets that have been set for him.

The package would include annual salary and several performance-based bonuses.

Sir Peter, who signed his new contract on 4 May, would only be entitled to the full amount if he completes the company's restructuring within 18 months and remains at BT until after 2002.

Yell cliff hanger

At the end of last week, BT's planned sale of its online business directory service, Yell, was hanging in the balance after UK regulators imposed caps on Yell's advertising prices.

In a second blow to BT, two leading ratings agencies have downgraded the company's credit worthiness, thereby pushing up the cost of servicing its debt.

The sale of Yell, which was expected to be completed this week, will now be delayed, or even called off.