The British Telecom share price, even after yesterday’s fillip, still languishes below the level at which the company was floated 24 years ago. But shareholders who bought in all that time ago have not done all that badly thanks to dividends, compound interest and the O2 demerger. Add in all those factors and investors have, astonishingly, made seven times their money, according to BT.

That respectable total return has been overshadowed by the company’s recent problems, in particular the bloated cost base and the disproportionately large pension fund. Ian Livingston, the new chief executive, is starting to grapple with both.

The 10,000 job cuts will help to prune expenses. The reduction is one of the biggest single corporate culls since the National Coal Board and the miners’ strike, just as BT was being privatised in 1984. BT has promised that there will be no compulsory redundancies, but that will be no comfort to the many with BT on short-term contracts.

Those BT staff lucky enough to be in the final salary pension fund (it closed to new recruits in 2001) are seeing their future benefits watered down. BT is introducing a raft of new measures including a higher retirement age, lower accrual rates and higher employee contributions in an effort to balance the books. It’s unfortunate, but at least BT is boosting contributions for its more recent recruits in the inferior money purchase scheme. Like other employers with staff split between different types of pension fund, resentment was building.

The great unknown for Mr Livingston is not the global economy. BT is big enough and recession-resistant enough to know within a few percentage points what its operating profits will be well into the future. The uncertainty lies in the stock market and what that means for assets in the £34 billion final salary pension fund.

The fund has partly pulled back from equity investment, but is still exposed to swings in share prices. By one measure it is currently in small surplus, but it would not take much of a new bear market to send it plunging back into deficit. It is possible to come up with a shortfall of £8 billion just by making different assumptions about longevity and other variables. No wonder that shareholders are braced for a big cut in the dividend.

Mr Livingston and his successors will have their work cut out to produce another sevenfold return in the next quarter century.

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