A struggling telecommunications company has made 85 people redundant at its Borehamwood headquarters as part of plan to cut its spending.

Redstone Telecom plc, based at Premier House, in Elstree Way, announced last Wednesday that 12 per cent of its staff would be made redundant.

The company this week blamed the job losses on a shortage of investors as a result of changing attitudes to the telecommunications market.

This week's redundancies follow the loss of 300 jobs at the Borehamwood office of another telecommunications firm, NextCall, in February.

Redstone's chief executive, Graham Cove, said: "The market has changed and we now have to assume nobody is going to put money into telecommunications companies.

"We have to slow down our growth and get ourselves into profitability and, if we are not going to grow as fast, we do not need as many people."

Jobs have been lost mainly in the marketing, information technology development and human resources departments at the Borehamwood headquarters.

Redstone, which was launched in 1995 in Borehamwood, specialises in providing telecommunications services to small and medium-sized businesses.

It leases its network from major companies, such as BT, Cable and Wireless Communications and One2One, to offer voice, data and internet services.

Since October 1999, when Redstone floated on the stock exchange, it has acquired seven companies and its workforce had increased from 130 to 700.

In February last year Redstone's shares reached their peak, at 949.5p, but yesterday the price was down to 64p. The company hopes the job cuts will save £6million a year.

Last month three of the company's top executives, including its chairman, left Redstone, which Mr Cove said was also part of the cost-cutting exercise.

Redstone had been forced to change course from its business plan, drawn-up when investors were keen on growing telecommunications businesses.

But Mr Cove said: "We are still very positive the important thing is to make the company profitable so we have a chance of people investing in it."

The company, which still has 150 staff in Borehamwood, this month launched a new service which can upgrade old copper phone lines for high-speed internet use.

However, the service, called Digital Subscriber Line, will initially only be introduced in some cities, rather than most of the country, as had been envisaged.

NextCall, which was based in Elstree Way and sold phone line packages bought from BT, went into receivership owing millions of pounds in February.

A total of 400 jobs were lost, around 300 of which were in the customer service, accounts and information technology departments in Borehamwood.