Telco BT has said the accounting scandal concerning its Italian division will have no impact on its British pay-television broadcaster BT Sport.
BT yesterday (Tuesday) saw almost £8bn (€9.3bn/$10bn), or more than a fifth, taken off its stock market value after disclosing that the scandal was much worse than originally stated. The company also warned of a slowdown in other operations, with international corporate clients and UK government departments reducing their spending after the Brexit vote.
As a result, BT said profits would be £300m lower than previously expected for this year, down from a forecast £7.9bn to £7.6bn.
BT previously announced on October 27 that an initial internal investigation of accounting practices in its Italian business had identified certain historical accounting errors and areas of management judgement requiring reassessment. At that time, BT announced the write down of items on the balance sheet by £145m, stating this was the best estimate of the financial impact of these issues.
Following a thorough investigation of the matter, BT has now said the adjustments identified have increased from the £145m announced in its half-year update to a total of around £530m.
BT described the “improper behaviour” in its Italian business is an “extremely serious matter”, and has taken immediate steps to strengthen the financial processes and controls in that business. A number of BT Italy’s senior management team have now left the business, while a new chief executive will take charge on February 1.
The latest news comes after BT last week confirmed that broadband customers will have to pay £3.50 per month for BT Sport from April 2. The change to the BT TV package is part of broader price rises across some landline and broadband services. Until now, BT Sport has been free for broadband subscribers.
A BT spokesman told UK newspaper The Mirror: “Today (Tuesday) has been disappointing but BT remains a strong company that is able to consider new sports rights should the price be right. We will generate around £2.5bn of cash this year and that will grow to more than £3bn next year. That gives us plenty of options.”