BT will unveil a restructuring of its troubled Global Services division this week, as chief executive Ian Livingston puts his reputation on the line to get the telecoms group’s fortunes back on track.

Alongside dire full-year figures, in which pretax profits have slid close to £550m, BT will give itself up to two decades to plug Britain’s biggest occupational-pension deficit.

Contributions will rise to £500m a year from £280m. However, the precise payment is yet to be fixed because the Pensions Regulator is intervening in talks to close a funding gap that has soared to between £6 billion and £8 billion.

BT could afford that after chopping the final dividend to 1.2p a share from 10.4p.

At Global Services, BT will divide the business into three distinct divisions focusing on its customers instead of trying to span the world. The changes will come alongside provisions for close to £1.5 billion to cover the restructuring and cost overruns on large-scale IT contracts for the NHS and Reuters.

Global Services boss Hanif Lalani is streamlining the division, once regarded as BT’s growth engine, to concentrate on industry sectors such as finance where it has done well.

He will hand a key role to Michael Boustridge, who already runs BT in America and Asia-Pacific. Boustridge will look after Global Services’ top 400 multinational customers, including Unilever and Credit Suisse.

A UK division will group together its public and private-sector contracts, although the NHS will be handled separately. Everything else, including acquisitions BT made to bulk up Global Services, will be put in a third division.

Livingston will emphasise a new era of cost cutting and point to good performances by retail, wholesale and Open-reach. The Scot told a group of staff recently that so far BT had not been hit by the recession.

Although Livingston may not be drawn on numbers, another 10,000 BT staff are expected to go in the next 12 months from its 160,000-strong workforce, as The Sunday Times revealed last month. Trade unions are worried that BT is gearing up to abandon its pledge not to push through compulsory redundancies.

Maurice Patrick, an analyst at JP Morgan, forecasts an 8p per share dividend for the current financial year ending in March 2010, almost half the level of 2008, but still giving BT a higher yield than the FTSE 100 average.

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