British Telecom (BT) reported a 7 per cent fall in second-quarter earnings but said it was on track for costs savings of £575 million sterling this year.
In its last set of results under chief executive Mr Peter Bonfield and before the demerger of wireless unit mmO2, BT said it would not pay an interim dividend but would offer a final dividend at the end of the year.
But it warned future dividends were likely to be substantially lower.
Shares in BT dropped as much as 6 per cent before the opening of the market as the second-quarter numbers failed to impress investors.
Earnings before interest, tax, depreciation and amortisation (EBITDA) were £1.463 billion, compared with analyst forecasts of between £1.470-1.505 billion.
The group said finance director Mr Philip Hampton would leave after November 2002, as his contract would not be renewed. This follows the announcement last week that Mr Bonfield would leave in January, a year ahead of schedule.
"All the numbers look a bit light and the finance director going will mean more upheaval," one dealer said, although he expected the stock to stabilise later in the day as attention switches to prospects for the demerging wireless unit mmO2.
Analysts have cut estimates for the value of mmO2, and now expect it will be worth between £6 billion and £8 billion. Earlier this year, some analysts had expected mmO2 to be worth around £10 billion.