BT will cut 13,000 managerial and back-office jobs and move to a smaller London base in the latest attempt by the boss of Britain's biggest telecoms group to rebuild from an accounting scandal and downturn in trading.
Chief Executive Gavin Patterson sought to placate shareholders by maintaining BT's dividend and agreeing a new pension funding plan.
But he forecast that it would take up to three years to return to profit growth, sending the company's shares down 9%.
Traders said guidance for the current financial year was lower than expected, while fourth-quarter revenue fell short of targets.
This showed the challenges facing Patterson as he seeks to rebuild a group that employs more than 100,000 staff.
BT, which owns Britain's biggest mobile operator EE, said it would hire about 6,000 new engineers and front line customer service staff to support its roll out of fibre and 5G networks.
Patterson, in the role since 2013, said the restructuring, would focus on the essential services needed by consumers and businesses.
"We need to ensure we are competitive in the future, that we can deliver products and services for our customers at the right price," he said.
"If we compare how we manage the business with our peers, we're frankly too complex and overweight. This is a big deal," he added.
The new strategy is the latest throw of the dice from Patterson who won early plaudits from investors when he moved BT into sports TV and mobile.
That goodwill came to an end when the group delivered a major profit warning in January 2017 due to problems at its multi-national Global Services division and the discovery of fraud in its Italian unit.
The shares, down 22% this year, are trading at levels last seen in 2012.
The job cuts, the highest number by the former monopoly since 2008, will save £1.5 billion in costs in three years, the company said. The restructuring will cost £800m to implement.
BT also agreed a new 13-year funding plan for its pension, which had a deficit of £11.3 billion at the end of June. It will pay £2.1 billion into the scheme by 2020 and a further £2 billion will be funded by the issuance of bonds.
The strategy comes after the group reported a 3% drop in fourth-quarter revenue to £5.967 billion, just missing analysts' expectations, while core earnings came in at £2.083 billion, up 1%.
BT said its outlook for the current financial year, to end-March, would see a 2% drop in underlying revenue, while adjusted core earnings would be in the range £7.3-7.4 billion, down from £7.5 billion in the last year.