BT shares nose-dive over pension deficit worries
SHARES in British Telecom nose-dived nearly 10pc at one stage in London yesterday after BT said its pension deficit had spiralled to £9bn (€10.3bn).
The UK's pension regulator also said it had "substantial concerns" about BT's plans to address the shortfall.
Releasing third-quarter results, BT said its adjusted earnings were 11pc higher at £1.44bn (€1.65bn), although revenue declined 4pc to just under £5.2bn (€5.97bn).
But it was BT's statement regarding its pension fund that really drew the attention of investors.
The company has agreed with its pension trustee to make payments to its pension fund equivalent to more than £500m (€574m) each year for 17 years in order to address the shortfall.
BT's Irish arm reported its first-ever profit in the 12 months to the end of March 2008 since entering the market in the Republic of Ireland in 1999.
Societe Generale analyst Saeed Baradar said BT's statement was "worrying" because the annual contribution will only be sufficient to cover about 70pc of the deficit over 20 years.
Shares in BT closed down 8.5pc at £1.20 in London.