BT confirmed plans to cut a further 15,000 jobs this year — nearly 10 per cent of its workforce and more than expected — as it took an axe to its dividend and admitted that it had plunged into the red.

The company, which has already reduced its headcount by 15,000 in the past year, said that 5,000 permanent positions would go during the next 12 months along with 10,000 posts held by agency and contract workers.

Ian Livingston, the chief executive, said that he regretted the job losses but insisted they were necessary to reduce costs as the telecoms giant traded its way through the recession. He expected that most of the full-time jobs going would be shed by not replacing departing staff or by using existing workers more effectively.

Mr Livingston added: “We will do our best to avoid compulsory redundancies. We are being very inventive about using outsourcing agencies in placing people — and we are also working very hard to retrain and redeploy them. Around 5,000 people go every year, anyway, through retirement. We are working closely with the unions here to change shift patterns — for example, to get more staff working in the evenings.”

Mr Livingston noted that it was crucial for BT to cut its use of agency and contract workers, saying: “All too often, people go on the Friday, only to come back on the Monday as contractors through the side door.”

He spoke as BT reported a pre-tax loss of £134 million for the year to March 31, compared with a pre-tax profit the previous year of £1.976 billion. That was due largely to losses of £2.04 billion at BT Global Services, the division that provides IT and telecoms services. BT's net debt rose from £9.46 billion to £10.36 billion.

Sir Michael Rake, the chairman, said that the company was committed to reducing that figure. “The level of debt we have is manageable but it is important to have debt reduction as an objective,” he said. “We'd like to see it reduced through free cashflow.”

To that end BT is cutting its dividend, with the full-year payout declining from 15.8p to 6.5p a share. Tony Chanmugam, the finance director, said that every penny cut from the dividend saved the company £77 million.

Mr Livingston said he regretted the financial pain that that would cause BT's shareholders, including more than 1.1 million small investors, many of whom have held the stock since BT was privatised 25 years ago.

He added: “Shareholders, of which I am one, would like to see a higher dividend, obviously. It has been a really difficult year and, yes, I apologise to shareholders. But I think the management team today are doing the right thing to deliver for share-holders in the future, and that's my real duty. Even after this cut, we will still be one of the highest-yielding stocks in the FTSE 100.”

Mr Livingston also revealed that BT would raise its annual pension contributions to £525 million, from £280 million, in each of the next three years. That comes after the group's pension swung from a net surplus of £2 billion last year to a deficit of £2.9 billion this year.

Jonathan Groocock, of Investec, said: “Any uncertainty over the pension deficit is very unwelcome. Today we were looking for closure on all these issues, and we have not got that.”

Shares in BT closed down 6p at 88.4p.

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