BT profits hit by Italian scandal

28 Juillet, 2017, 15:49 | Author: Marc Bacque
  • Reuters

The British company purchased mobile operator EE from Deutsche Telekom and Orange a year ago, in a £12.5-billion deal under which the pair also became BT shareholders.

But those investments took a big hit when the accounting scandal came to light, with Orange (NYSE: FTE) selling some BT shares at a loss and Deutsche Telekom AG (NYSE: DT) writing down the value of its 12% stake by €2.2 billion ($2.6 billion).

BT said the payment represented a "full and final settlement" in light of those issues, but CEO Gavin Patterson - who was made to sacrifice his annual bonus following the scandal - made no reference to the crisis in his formal statement, saying BT had delivered an "encouraging performance" and made "good progress in our key areas". "This is disappointing but it is the best possible outcome for shareholders and avoids litigation and market uncertainty".

At the time of publication, BT's share price was trading down about 2.3% in London on the update and is now about 17% lower than at the start of the year.

Shares in BT plunged 20% in January after it uncovered a £530 million black hole in its Italian business.

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Marc Callera, who is now the CEO of EE, has been appointed to lead a newly created consumer business - bringing together BT's consumer group and EE businesses.

Revenues rose one percent from the same period previous year to £5.84 billion.

From 1 September 2017, BT will fold EE - which up to now has been run as a sixth standalone business unit - into an enhanced BT Consumer business that will incorporate its other consumer brands (BT and Plusnet) and span fixed and mobile networks, consumer products and services, and content.

BT also launched a new restructuring to simplify the business and changed several senior management roles, including the head of regulation, to help improve relations with the regulator which previously considered breaking BT up. For the current 2017/18 year, it has forecast that underlying revenue will be broadly flat and core earnings will fall to 7.5-7.6 billion pounds. It means that BT's consumer chief John Petter is out after 13 years at the company.

Shares in telecoms group BT fell 3.5% after it took a £225m charge related to its Italian accounting scandal.

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