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January 27, 2017

BT scandal sees profits fall 37%

In yet more bad news for BT, the company's Q3 report sees profits fall by 37%.

By Joe Clark

BT profits have fallen by 37% to just £526m in the three months to December 31.

The report comes in the wake of the Italian scandal which saw the company forced to devalue it’s Italian division by £530m causing shares to plummet 19%.

Despite this, BT said that it’s revenue was up 32% to £6.1 billion in it’s third quarter due to strong performance throughout the rest of the company and acquisition of mobile unit EE.

The company reported 276, 000 new customers signed up to the EE service, 83,000 broadband customers, and 260,000 who had switched to higher speed fibre connections.

BT

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

“We face a more challenging outlook in the UK public sector and international corporate markets but we’ve seen record growth at EE, strong momentum in Consumer, and our highest ever fibre net connections in Openreach. Customer experience remains a top priority.”

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The revelations of the Italian scandal have prompted a criminal investigation by Italian authorities and the resignation of BT President of Continental Europe, Corrado Sciolla. The company has had approximately $8 billion wiped from it’s total value this week, it’s biggest one day fall since it privatisation in 1984.

Despite the ramifications of the scandal Senior Analyst – Operators, CCS Insight, Kester Mann said: “BT has hinted a good performance in its consumer-facing businesses, with EE expected to post a year-on-year increase in revenue for the first time. Meanwhile, Openreach is due to reveal its highest ever fibre broadband connections alongside improvements to its often-criticised customer service.”

After a week of bad news, BT has issued a profit warning for both 2017 and 2018, and shares have currently fallen 22% since Tuesday.

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