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Another one bites the dust as losses rise

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Update BT's highly respected finance director, Philip Hampton, is to quit the monster telco after just a year in the job.

The news - widely trailed in weekend newspaper reports - comes hard on the heels of last week's announcement that chief exec, Sir Peter Bonfield, is to step down at the end of January.

The result is that BT now has to find two key replacements to help turn the company around and restore shareholder confidence in the business.

Speculation as to Mr Hampton's early departure appear to focus on friction between him and new(ish) chairman, Sir Christopher Bland.

In a statement, the chairman said: "The contract of Philip Hampton, Group Finance Director, will not be extended beyond November 2002 because he wishes to seek new challenges once the demerger of mmO2 [BT's mobile division] and the restructuring of BT are complete. He will leave BT on a date to be agreed with me."

Unfortunately, even Mr Hampton's early departure has failed to provide enough distraction from other concerns at the telco.

Publishing its second quarter results to September 30, BT reported that group turnover rose to £5.3 billion - up from £5 billion in the corresponding quarter last year.

But pre-tax losses hit a whopping £1.4 billion compared to a profit of £471 million in Q2 last year. Part of this quarter's loss is reflected in the cost of scrapping the failed Concert joint venture.

Putting a brave face on things the chairman said: "Although the general economic outlook for the second half of the financial year is uncertain following the events in the US on September 11, most of BT's businesses have strong market positions and have so far proved to be relatively resilient."

The company also announced that it is to shelve plans to split BT's retail and wholesale businesses drawing a veil over the company's ambitious restructuring plans.

Elsewhere, the company reported that it had reduced its debt burden over the three month to September by £1 billion cutting it £16.5 billion.

BT has also said it has identified a number of "productivity improvements and cost savings" and claims it is on track to reduce costs by around £575 million in the current financial year.

And in another slap in the face for investors the company confirmed that it would not be paying an interim dividend in the current financial year. However, it hopes to pay a final dividend for the year and to resume regular dividend payments, although these are likely to be "substantially lower" than before.

By mid-morning shares were down 9.5p (2.8 per cent) to 328.5p recovering slightly after early falls. ®

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