Former telecoms monopoly BT has seen its profits dented by charges linked to its Italian accounting scandal.
The group will cough up £225 million to Deutsche Telekom and Orange in a bid to avoid legal action after its share price slumped in the wake of the scandal, which saw BT book a £530m write down earlier this year.
The payout relates to the sale of mobile giant EE by the pair to BT for £12.5 billion, which left Deutsche and Orange with stakes in the UK firm. The share slide following the Italian scandal left it exposed to legal action from shareholders.
BT’s pre-tax profit tumbled 42 per cent to £418m in the latest quarter, though adjusted Ebitda was only fractionally lower.
Hargreaves Lansdown analyst George Salmon noted: “The accounting scandal in Italy has led to another £225m of nasties turning up in first-quarter numbers, to add to the £530m the group originally set aside back in January.
“In addition to this, misdemeanours at Openreach mean a total of £340m is to be paid in fines and compensation, and another £300m is needed to cover the cost of restructuring a number of divisions, including Global Services.
“All the while the circa £16bn pension and debt pile looms over the group.
“However, it’s probably unfair to paint an entirely gloomy picture. BT has shaken off demands to fully separate the higher-margin Openreach division, and assuming there aren’t any more skeletons in the closet, the cash flows from EE and the growing Consumer division are potentially attractive.”