BT takes £145m hit on Italian "accounting errors"

By:
James Pearce
Published on:

Operator discovered "inappropriate management behaviour " at it's Italian arm following an internal investigation

BT has incurred a £145 million charge after it discovered “accounting errors” at its Italian division.

The company said an internal inquiry had found “inappropriate management behaviour” at BT Italia, leading it to “reassess certain areas of management judgement.”

The inquiry was linked to “certain historical accounting errors”, although BT said these had not materially impacted its reported earnings over the past two years.

The £145 million charge was “our current best estimate of the financial impact based on our internal investigation. The write-down relates to balances that have built up over a number of years.”

In September, Bloomberg reported that BT had suspended the CEO and COO of its Italian unit as it investigated an undisclosed matter. It is unclear whether the suspension of CEO Gianluca Cimini and Chief Operating Officer Stefania Truzzoli is linked to the write down.

It was one of the few blights on BT’s latest financial results, where it posted a 35% soar in sales to £6.01 billion in the three months ending 30 September. Pre-tax profits also grew, by 5%, to £671 million.

The telecoms giant’s acquisition played a major role in the growth, with revenue excluding its new mobile arm, bought in January, rising just 1.1%.

Gavin Patterson, chief executive at BT, said: "This is a positive set of results, both operationally and financially, and we remain on track to achieve our full-year outlook. We’ve made good progress on the integration of EE and the delivery of our synergy targets.

"Our consumer facing lines of business have performed well, but in the enterprise space, UK public sector continues to be a challenging market. Across the group, we continue to drive cost reduction and productivity improvements.

"Customer experience remains a key priority, and we’re stepping up our investments in the second half of the year. And we’ll continue to invest in our ultrafast and 4G plans in 2017 and beyond."