Monday 19 August 2019

Sports rights and global services woes hit BT profits

The group saw adjusted earnings drop to £1.8 billion in its second quarter to September 30, leaving half-year earnings 3% lower at £3.6 billion.


By Holly Williams, Press Association Deputy City Editor

Telecoms giant BT has revealed a 4% slump in quarterly earnings as the group counted the cost of heavy investment in sports rights and ongoing woes in its troubled global services arm.

The group saw adjusted earnings drop to £1.8 billion in its second quarter to September 30, leaving half-year earnings 3% lower at £3.6 billion.

On a bottom-line basis, pre-tax profits tumbled 22% to £1.1 billion in the six months to September 30, with a 1% fall to £666 million in the second quarter.

BT said it took a hit from deals for football and sports rights and investment in customer service as well as its global services arm, which saw earnings tumble by 39% to £81 million in the second quarter.

The group confirmed it was expecting to consult with employees “shortly” over changes to its pension scheme but said this was still under review.

BT is reportedly planning to close its defined benefit pension scheme to future accruals in a bid to plug a gaping funding hole.

It had a pension deficit of £7.7 billion as at the end of September, down from £8 billion as at the end of June.

Gavin Patterson, chief executive of BT, said: “Our first-half results are in line with our expectations as encouraging results in our consumer-facing lines of business, notably EE, helped offset ongoing challenges in our enterprise divisions, in particular global services.

“Given our underlying business performance, we are maintaining our outlook for the year.”

BT said it spent another £6 million in investigation costs in the first half over its recent Italian accounting scandal, which resulted in a £530 million write-down and a major fall in its share price, knocking £8 billion from BT’s market value.

It said during the first half “it continued to take steps to improve the control environment in our Italian business but recognise that we have further activities to complete during the second half of the year including the assessment of our internal controls over financial reporting”.

BT said it was taking “robust actions” to improve the performance in its global services business.

It is axing 4,000 jobs as part of a heavy restructuring in the division, which operates across 180 countries.

But its EE mobile business helped offset some of the global services troubles in the first half, with EE earnings up 16% to £326 million in the second quarter after revenues rose 4%.

It added 279,000 contract mobile customers, taking the total to 17.3 million.

Shares in the group lifted by nearly 1% after BT held its full-year outlook and interim shareholder dividend payout.

PA Media

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