BT GROUP’S quarterly profits reverse charged 42 per cent after it was forced to pay £225million to two leading investors after an accounting scandal in Italy
The payouts were made to avoid legal action by Deutsche Telekom and Orange, which became shareholders when their mobile joint venture EE was bought by BT last year for £12.5billion
The pair were issued a warranty as part of that deal as a protection against a downturn in BT’s performance.
BT’s share price plunged by a fifth in January as it admitted the size of the black hole in the accounts of its Italian operation had ballooned to £530million.
ts shares are just above that level after falling 5¾p to 310½p yesterday.
We’re disappointed, this had only very recently come up
Gavin Patterson - BT chief executive
BT chief executive Gavin Patterson said Orange and Deutsche Telekom had raised the issue ahead of a deadline to make a claim by yesterday, which could have led to a lengthy legal process.
He said: “In common with any acquisition there were warranties put in place and the settlement today is to address that. We’re disappointed, this had only very recently come up.”
On a small number of class-action lawsuits filed in the US after the scandal he said BT has a “strong case” to defend.
BT chief executive Gavin Patterson GETTY
BT chief executive Gavin Patterson
The charge sent BT first-quarter pretax profit 42 per cent down to £418million. It also paid a £42million fine to regulator Ofcom and faces a £300million compensation bill over delays installing high-speed cables.
Revenue was up 1 per cent to £5.83billion, but adjusted pre-tax earnings fell 2 per cent to £1.78billion on higher pension costs, business rates and rising sport programme rights costs.
BT also rang changes among senior management. John Petter, the boss of its consumer business and key player in the development of BT Sport, is stepping down after 13 years with the group.
A new operation combining BT’s consumer and EE businesses will be headed up by current EE chief executive Marc Allera.
Patterson paid tribute to Petter for overseeing the rapid expansion of the consumer division and said Allera’s new appointment reflects the “growing scale and ambition of BT”.
BT has signed Cathryn Ross, CEO of water regulator Ofwat, to direct regulatory affairs.
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The charge sent BT first-quarter pretax profit 42 per cent down to £418million. It also paid a £42million fine to regulator Ofcom and faces a £300million compensation bill over delays installing high-speed cables.
Revenue was up 1 per cent to £5.83billion, but adjusted pre-tax earnings fell 2 per cent to £1.78billion on higher pension costs, business rates and rising sport programme rights costs.
BT also rang changes among senior management. John Petter, the boss of its consumer business and key player in the development of BT Sport, is stepping down after 13 years with the group.
A new operation combining BT’s consumer and EE businesses will be headed up by current EE chief executive Marc Allera.
Patterson paid tribute to Petter for overseeing the rapid expansion of the consumer division and said Allera’s new appointment reflects the “growing scale and ambition of BT”.
BT has signed Cathryn Ross, CEO of water regulator Ofwat, to direct regulatory affairs.