BT’s third-quarter results announced today show what CEO Gavin Patterson called solid core operations, but any positive news was overshadowed by the Italy scandal and predictions of a flat future.
BT’s investors were stunned by revelations of the £350m write-down of the BT Italia business, which has been hit by accounting scandals. Patterson said 'Frankly I am angry that the integrity of BT has been undermined by the wrongdoing of a few individuals in one part of the business. The situation is now under control, we have already appointed new management and as you would expect we are proactively providing assistance for the Italian authorities.'
BT came up with some positive news including 276,000 customers signing up for monthly contracts with EE, low churn of 1.1 percent, 83,000 added broadband customers, and 260,000 switching to faster fibre connections. 'We mustn't lose sight of the fact that BT is in good health overall,' Patterson said.
‘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. EE is now answering 100 per cent 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.’
But with profit before tax down 37 percent in the third quarter at £526m, and BT’s own prediction of broadly flat revenues for the next two years, BT shares were down 0.5 percent early on Friday.