BT profits plunge in wake of overseas accounting scandal as firm shakes up senior management

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BT boss Gavin Patterson gave up his bonus due to the Italian scandal (Source: Getty)

BT has reported a massive drop in profit for the three months to 30 June, as it grapples with an overseas accounting scandal and regulatory changes to its Openreach business.

The figures

Revenue inched up by one per cent to hit £5.84bn in the first quarter, compared with £5.78bn this time last year. 

However, pre-tax profit was down 42 per cent at £418m, compared with £717m in 2016 and earnings per share dropped 51 per cent from 5.9p to 2.9p.

Shares in BT fell 1.5 per cent at the open to 311p.

Why it's interesting

BT announced in January that an overstatement of earnings in its Italian business would cost it £530m, dwarfing initial estimates of a £145m hit. In the aftermath, the company announced 4,000 jobs would be cut in a revamp of its overseas operations, and chief exec Gavin Patterson gave up his bonus. 

Meanwhile, in March the group was given a £42m fine, the largest in UK telecoms history, by Ofcom. The watchdog also ordered it to pay £300m to competitors because it failed to pay compensation for broadband installation delays by Openreach.

What BT said

"BT has delivered an encouraging performance in the first quarter of the year," said Patterson.

"We've made good progress in our key areas of strategic focus: deliver great customer experience, invest for growth, and transform our costs. In particular, I'd highlight the growth achieved by our consumer facing businesses, helped by mobile.

"We will continue to simplify and streamline the business and rationalise our costs as demonstrated by our ongoing performance transformation programme. Our businesses are leaders in their core segments and as we drive the business forward I am confident in the outlook for our company."

Tags: BT Group