Hundreds of millions of pounds are to be stripped from the running costs of telecoms company BT Group in a �pre-emptive� move to protect it from recession, but investors could still see the dividend cut.

Hundreds of millions of pounds are to be stripped from the running costs of telecoms company BT Group in a "pre-emptive" move to protect it from recession, but investors could still see the dividend cut.

Pre-tax profit at the company was down 9% at £1.2bn in the six months to September 30, while sales grew 3% to £10.5bn.

The company reiterated its October comments that its global services division, which provides network services to multinational companies, was to blame - highlighting lack of cost control as a key problem.

The company will axe 10,000 jobs during this financial year, of which 4000 have gone so far, from its 160,000-strong global workforce as part of £700m to £800m in cost savings it is seeking to achieve this year.

BT is also looking to save £100m a year from revamping its pension scheme, which effectively sees the closure of the UK's largest private sector final salary fund.

BT predicted a "small decline" in earnings before interest, tax, depreciation and amortisation in the full year to March. However, investors focused on the cost-cutting moves and the widely-held stock powered 8.9%, or 10p, ahead to 122.5p, having touched 20-year lows after its earnings warning.

Chief executive Ian Livingston said: "I think there is nothing wrong with our strategy. I think what we need to do is execute really well."

Group finance director Hanif Lalani is replacing global services chief Francois Barrault.

While maintaining that BT's other three business units are continuing to increase profits, Livingston yesterday gave a cautious view of the future.

He said: "Do not believe anyone who says recession is good for them.

"It will have an impact as unemployment rises and businesses close. That is why we have been working hard on our cost base."

He said BT had seen a 15% to 20% fall in broadband connections as house sales tumbled.

"Retailers are not ordering as much as they used to. Some sectors are taking longer to take decisions than before. But some banks are talking about global network outsourcing where they would not have before."

He said of the job cuts: "They are pre-emptive We are trying to get ahead of the curve."

BT's job losses account for more than 6% of its total global workforce.

Livingston said: "We do not see a need to have compulsory redundancies."

He added that the company tends to see 7000 staff leave each year.

BT would spend £150m to £170m on voluntary leavers such as those taking early retirement but it acknowledged most job cuts would be in the UK where it has the greatest number of workers.

BT employs 8500 staff north of the border, 6800 of them directly, but the company said it was unable to say how many jobs would be lost in Scotland.

The company also said it had secured union agreement for changes to the staff pension scheme which is expected to save the company around £100m a year. The scheme is in surplus but the proposed changes include increasing the retirement age to 65 and moving from a final salary to career average pension. This will only affect future accrual.

BT maintained its interim dividend at 5.4p but the company would not confirm future pay-outs.

Livingston said: "We do not think we would pay the same dividend in a Footsie that is at 3000 (points) than one that is 6000."

However, he added: "We will pay a strong dividend. We will run a strong yield stock and we are in a strong financial position.

"But we are in the most volatile market people have seen for 70 years and that is not an environment to be looking too far ahead."