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Comments Off on BT Profits Fall 37% After Italian Accounting Scandal

BT Profits Fall 37% After Italian Accounting Scandal

Posted by Admin | January 30, 2017 | Telecoms

BT’s profits have slumped by more than a third as it counted the cost of a damaging accounting scandal in its Italian business.

The update came as the group’s Europe boss Corrado Sciolla left the telecoms giant in the wake of revelations about the scandal earlier this week that helped wipe nearly £8bn off its value as its shares fell 21%.

BT said pre-tax profits were 37% lower at £526m for the third quarter to the end of December.

The company this week said the scale of accounting irregularities in its Italy business was much larger than it had first thought and would knock £530m off its bottom line.

Prosecutors in Milan are investigating.

Sources have previously told Sky News that while Mr Sciolla was not considered to have any involvement in the scandal, he had taken executive responsibility over the affair.

BT said its headline revenues were up 32% to £6.12bn for the third quarter reflecting its acquisition of mobile phone operator EE – though they were 1.5% down on an underlying basis.

The group said many parts of the business were performing well, with broadband and TV revenues growing 8%, and more broadband customers shifting to high-speed fibre connections.

Chief executive Gavin Patterson said: “The good progress we’re making across most of the business has unfortunately been overshadowed by the results of our investigations into our Italian operations and our outlook.”

BT’s shares this week saw their biggest one-day fall since the company was privatised after it unveiled details of the scandal as well as warning on the performance of its UK public sector and international corporate markets.

It said the impact of the accounting irregularities was much greater than first thought, having already taken a £145m hit when it initially disclosed the problem last autumn.

BT’s latest update on Friday showed an additional £100m charge to third quarter results from the scandal. There was also a £268m impact on prior years, which have been revised.

Investors affected by the recent share price fall include the company’s army of small shareholders, dating back to when it was first listed on the stock market in 1984 in a much-publicised float.

Mr Patterson said: “Many of our shareholders are unhappy and they have a right to be.

“Frankly I am angry that the integrity of BT has been undermined by the wrongdoing of a few individuals in one part of the business.

“The situation is now under control, we have already appointed new management and as you would expect we are proactively providing assistance for the Italian authorities.”

The telecoms group has separately been embroiled in controversy over its UK wholesale telecoms network, Openreach.

Regulator Ofcom in November ordered a legal separation of Ofcom from the wider group but stopped short of demanding a full break-up.

Source: 964eagle

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