BT reports 43pc profit drop after £225m charge over Italian scandal

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Total reported revenue for the business is flat, up one per cent to £5.8 billion

BT has announced (July 28) a 42 per cent drop in profits in Q1 of its financial year before having to pay Deutsche Telekom and Orange £225 million to avoid legal action caused by its Italian accounting blunder.

The financial hit plunged the telecom giant’s pre-tax profit 42 per cent to £418 million in the three months ending June 30. In January, BT reported a £530 million black hole in its Italian operations.

Total reported revenue for the business was flat at £5.8 billion. Reported EBITDA declined 18 per cent from £1.78 million to £1.46 million year-on-year, due to a “result of increased pension costs, business rates, sport programme rights and increased customer investment.”

Monthly mobile subscriber average revenue per user (ARPU) was at £20.4 up nine per cent year-on-year. BT subsidiary Openreach reported fibre connections at 437,000 connections.

Restructure

BT consumer CEO John Petter will be stepping down from his position as part of a restructure of the integration of EE into the business by September. He has been in the position for four years and part of the business for 13 years.

EE CEO Marc Allera will assume the role of CEO of combined BT consumer business come September, with Cathryn Ross to join as director of regulatory affairs in January.

BT said in a statement: “The Consumer and EE businesses will operate separately for the rest of this year with management coming together from September to develop the integration plans for the business.”

Building investments 

BT chief executive Gavin Patterson said: “I’d highlight the growth achieved by our consumer facing businesses, helped by mobile. BT, with Openreach, is well placed to support the roll out of FTTP in the UK, and we’re consulting with Ofcom, Government and other communications providers to build the investment case to achieve this outcome.

“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.

“Our businesses are leaders in their core segments and as we drive the business forward I am confident in the outlook for our company.”

CCS Insight director of multiplay and media Paolo Pescatore said the coming together of both firms “makes perfect sense” but believes BT will carry on with a multi-brand approach. He said: “The two consumer units of BT and EE have finally come together. This makes perfect sense, will be far stronger moving forward and will realise significant cost savings. However, we still expect the company to continue with its multi brand approach.

“The move initially to integrate the financials and now the lines of business inevitably means that the company will move towards one brand much more likely. Combining the billing and service operations will continue to take time before we truly see a single bill from BT for all services.  For consumers there will be significant long term benefits.”

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