BRITISH Telecom plans to shed 2,000 jobs this year as part of its ongoing attempts to cut costs.

The group is aiming to make savings of £850m over the next three years and intends to claw back £240m of that this year.

The bulk of this year's targeted savings will be met by trimming 2,000 jobs in its retail arm, BT Retail, which employs 50,000 people.

The division, which provides services to homes and small businesses, has already axed 3,000 jobs as part of its attempts to restructure and cut debt levels.

BT Retail chief executive Pierre Danon said the latest round of the losses would be through natural wastage, rather than compulsory redundancies.

He said it was likely that the arm would shed another 2,000 next year, again through natural wastage.

The announcement came as BT said the group's overall debt mountain, which last year peaked at £29bn, would hit its target of £15bn by July.

A record-breaking £5.9bn rights issue, disposing of its Yellow Pages business Yell and selling a raft of properties have all helped slash debt levels.

Robin Pauley, director of BT group communications, said: "We hope that we are now out of the tunnel and back into clear water again. We have taken very big steps towards restructuring and reorganising."

BT Retail also launched a new advertising campaign after sending its current advertising star, extra terrestrial ET, home. The new campaign, which begins on Thursday, features adverts where a series of people ask questions in a packed stadium, receiving answers from members of the audience. BT hopes the ads will highlight the need to communicate. It refused to comment on the cost of the campaign