Kcom (LSE:KCOM)
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U.K. telecommunications and Internet service provider KCOM Group PLC (KCOM.LN) Friday said it will cut 150 jobs in its struggling integration and managed services business, where revenue fell 10% for the 2008 full fiscal year from 2007.

The company said in a trading statement for the quarter ending Dec. 31, that it expects trading to remain challenging, but expects its integration and managed services (IM&S) division to return to profitability, before exceptional items, during the final quarter of the financial year.

Hull, England-basedKCOM, formerly Kingston Communications, has around 2,700 staff in the U.K. The announcement of job losses at KCOM's IT services business comes after BT Group PLC (BT) earlier in January said failings at its Global Services division would lead to a GBP340 million charge and vastly reduced earnings.

KCOM previously posted a net loss of GBP101 million for the six-month period ended Sept. 30, compared with a net profit of GBP7.2 million in the same period a year earlier, attributing the losses to a GBP107 million charge for impairment of goodwill following a poor performance at its IM&S division.

Still, KCOM Friday said the division was improving, and contributed to a year on year increase before exceptional items in group operating profit and profit before taxation, in the nine month period to Dec. 31.

KCOM announced last year a reshuffle of its board. Chief executive Malcolm Fallen and Chairman Michael Abrahams stepped down to be replaced by senior independent director Bill Halbert, the founding CEO of BT Group PLC's (BT) IT services subsidiary, Syntegra.

"The current economic uncertainty has hit us as more clients are watching their costs and not renewing contracts," Chairman Bill Halbert said in an interview with Dow Jones Newswires. "It's not so much pressure from our competitors that's a concern it's more specifically about keeping our pipeline intact and maintaining a good topline."

KCOM's future is now geared towards delivering higher value, high margin end-to-end services to businesses. "It's not nearly a matter of just cutting costs," Halbert said, "We're now aiming to change the shape of the business to increase its profitability."

To achieve this, the focus will be on delivering all-inclusive service packages to clients and signing multi-year contracts that would ensure a constant revenue stream.

KCOM, whose customers include British Airways PLC (BAY.LN) and Visa Inc. (V) also announced that it wasn't seriously effected by the collapse of another client, Lehman Brothers (LEH) last September.

The group also said it anticipates a reduction in net debt as at March 31, saying that it has a solid financial base with a committed bank facility in place until 2012.

"We're staying cautious because of the current state of the market, but we're confident that there's a strength and resilience in our telecoms and Internet services business," Halbert said.

At 1426 GMT, KCOM shares traded up 13.2% or 2 pence, at 15p. The shares have lost 75% of their value in the past 12 months.

Company Web site: www.kcom.com

-By Elliott Ball, Dow Jones Newswires; 44-20-7842-9314; elliott.ball@dowjones.com

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