BT workers are to be balloted on strike action after the firm failed to meet a union-imposed deadline for improving a 2% pay offer.
The Communication Workers Union (CWU), which represents 50,000 BT staff, will now ballot its members over action.
The union, which is seeking a 5% pay rise, said it was "very disappointed" BT had not improved its offer despite "healthy profits" this year.
BT said that its pay offer was fair and realistic.
The CWU passed a motion calling for a strike ballot at its annual conference last week.
It gave BT a deadline of noon on Friday to increase its 2% offer. It says 5% is fair as it is in line with inflation.
Andy Kerr, CWU deputy general secretary, said: "Our members are angry about the blatant double standards when it comes to pay for those at the top compared to the rest of staff at the company."
Earlier this month, BT said it had returned to profit, making £1bn ($1.45bn) in the year to 31 March. It had made a loss of £244m the previous year.
And last week, BT confirmed that its chief executive, Ian Livingston, would be paid a £1.2m bonus for his work last year.
Responding to the news of the strike ballot, BT said: "It is in no one's interest for industrial action to take place. Our final offer is fair, realistic and more generous than those they have accepted elsewhere.
"This offer could see their lowest paid members receive up to 5.4% in pay and bonuses with some thousands of staff also enjoying a second pay rise in October."
The company has been preparing for the possibility of industrial action.
Last week, it sent an internal e-mail to BT managers asking them for help in compiling a database of abilities.
It said: "Declare your skills... You will be aware of the company's final pay offer to the CWU. Like many other companies we have a difficult year ahead of us with the global financial climate and increasing competition."
Over the past two years BT has reduced its headcount by 35,000, a fifth of its workforce.