The UK telecoms giant BT is to axe 3,000 managers after stunning investors by announcing a 24% fall in profits.

The former state monopoly, hit by new competition and call charge cuts, saw £14.5bn wiped off its value on the London Stock Exchange following the announcement on Wednesday morning.

In early afternoon trade, BT's share price was 19% lower at 964 pence.

The job cuts will account for 10% of all BT management, will involve mainly administration staff and be mostly achieved through voluntary redundancies.

Company officials are to meet union representatives later on Wednesday to discuss the job cuts.

More redundancies are likely to follow, BT warns.

"Yes I'm sure there will be (more redundancies). There have been for some considerable time in BT as we reshape the business," chief executive Sir Peter Bonfield told BBC Radio 5 Live.

Observers say that even though BT is culling its management, its staff headcount is rising as it takes on more call centre and engineering staff. Its staff levels are also boosted by continued acquisitions.

The company employs 118,000 people in the Britain and 125,000 worldwide.

Profits slump

The news came as the telecom giant's profits slumped 24% in the first nine months of the financial year.

BT has suffered because of increased competition in a booming sector.

The company said it had been particularly hit by a 25% reduction in the price of calls from fixed to mobile phones. Its new BT Together price plan also hit turnover.

"In this quarter, competitive pressures have adversely affected operating margins in the UK fixed voice telephony market," said BT's Chairman Sir Iain Vallance. "The results also reflect the costs of meeting increased customer demand and of growing new areas of business."

But he added: "BT remains well positioned to take advantage of exciting developments in the market."

Hard times

Pre-tax profits at BT to £2.313bn from £3.459bn in the same period a year earlier.

Shares in BT dropped 16% in early trade, wiping an estimated £13bn off its stock market value.

The redundancy programme will cost the company about £350m, including incremental pension costs. The redundancies should save the company £140m a year.

The company released its results one week ahead of schedule.

Turnover rose to £5.585bn from £4.684bn in the previous quarter, helped by BT's recent acquisitions in Japan, the US, Korea, its domestic mobile business BT Cellnet and a string of fast-growing European joint ventures.

Market surprise

The results surprised analysts, with many now downgrading their forecasts for end-year profit from about £3.5bn to £3bn.

"These figures undershot forecasts by 3% to 5%. The main negative is pressure on margins due to increased wholesale traffic and call prices coming down," James Ross, analyst at ABN AMRO, said.