BT Takes Fresh Hit Over Italian Accounting Scandal

BRITAIN-TELECOMS-BUSINESS-BT

The £225 million ($294 million) payment is meant to prevent Deutsche Telekom and Orange from taking legal action against BT that could have proven much costlier.

Accounting irregularities in the telecom's Italian division were uncovered in January, leading to the dismissal BT's European head Corrado Sciolla and forcing the telecoms giant to take a £530 million writedown and wiped almost £8 billion off the company's value.

On Friday BT said it had taken a 225 million pound charge to settle warranty claims from Deutsche Telekom and Orange which became shareholders as part of the sale of their mobile joint venture EE to BT in 2016.

BT said the £225m payout represents a "full and final settlement in respect of these issues".

BT's Gavin Patterson: Settlement 'is disappointing but it is the best possible outcome for shareholders'.

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.

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Profit before tax for the three months to the end of June came in at £418 million ($546.7 million), compared with £717 million in the same time period past year.

The British telecoms provider stunned shareholders in January when it revealed a 530 million pound ($693 million) black hole in its Italian accounts and a slowdown in United Kingdom government work, wiping 8 billion pounds off the company's value on the day.

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.

Sales rose 1 per cent to £5.8bn, compared to the same period previous year. Ebitda fell by 18% to £1.47 billion and earnings per share fell 51% to 2.9 pence.

"Our new consumer business will operate our three distinct brands; BT, EE and Plusnet; to leverage our position as the largest and only fully converged player in the market, spanning fixed and mobile networks, consumer products and services as well as content", Mr Patterson added. BT is looking to boost customer spending and loyalty in anticipation of a looming slowdown in broadband growth in the next two years.

Petter was one of the architects of BT's aggressive expansion into sports broadcasting as it seeks to protect its consumer base from competitors such as Sky.

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