BT chief: Italian scandal has overshadowed good progress
BT's Gavin Patterson says the fallout of an accounting scandal in its Italian division has “overshadowed” good progress across the rest of the company.
An internal investigation by BT revealed “improper” accounting and practices in the Italian business that had led to a huge overstatement of earnings.
BT initially estimated the financial impact of the issues at £145m, but increased that figure to £530m earlier this week following an independent review by KPMG.
Shares in BT have since fallen 22% and its quarterly financial report, published today, shows pre-tax profits for the three months to 31 December 2016 down 37%.
But revenue for the quarter was up 32% and BT added 83,000 new broadband customers, with 260,000 switching to fibre.
BT’s infrastructure business, Openreach, made 498,000 fibre broadband connections with 48% coming from service providers other than BT.
EE added 276,000 pay-monthly mobile customers and BT added 52,000 new TV customers, taking its base to 1.7m.
Mr Patterson (pictured), the group’s chief executive, said he was “deeply disappointed” with the practices uncovered at BT Italy.
“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,” he said.
“This has no place at BT, and it undermines the good work we’re doing elsewhere in the group. We are committed to ensuring the highest standards across the whole of BT.
“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.”
'Pushing ahead with reforms'
He said improving the customer experience remained a top priority.
“EE is now answering 100% of its customers’ calls in the UK and Ireland. In Openreach, missed appointments have halved year on year.
“We’ll continue to invest to ensure our service levels improve and that our customers see the benefit.
“We are pushing ahead with reforms at Openreach, particularly on governance and customer service and continue to believe an agreement can be reached with Ofcom on its Digital Communications Review.
“We think these changes address Ofcom’s concerns and can form the basis for a fair, proportionate and sustainable settlement.”
Last week, BT confirmed a number of price increases, with the cost of standard broadband going up by £2 a month and fibre broabdand by £2.50 from 2 April.
It also announced that BT TV customers who currently get BT Sport for free will be charged £3.50 a month for the service from 1 August.
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