Feeds

BT hit by property rule change

Leaseback deal bites back

  • alert
  • submit to reddit

The Power of One Infographic

Telco behemoth BT might see its bottom line hit by changes to accounting rules relating to leasing or renting property.

The change is important because in 2001 BT sold £2.4bn of property to Land Securities Trillium to help it cut its massive debt mountain. BT leases back the 6,700 properties which include call centres, local exchanges, vehicle depots and warehouses.

But property must now be accounted for under standard IAS 17 which changes the way leases are defined. Many leases are likely to change from "operating leases" to "finance leases". Finance leases mean that payments to the landlord are considered interest rather than rent and so must be considered an asset and a liability.

The change is likely to make it more expensive for BT to borrow money. Land Securities is writing off a massive £659m exceptional charge for the changes.

In late January it emerged that the European Commission is to investigate BT and Kingston over allegations that they enjoyed illegal state aid from paying reduced business rates. The government used different methods to judge the rateable value of properties owned by Kingston and BT. The investigation followed complaints from Vtesse Networks. ®

Related stories

BT bashed in prisoners' call discount row
BT clobbered in Ofcom probe
BT, Kingston face EC illegal state aid probe

Boost IT visibility and business value

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple ran off to IBM
But never fear fanbois, you're still lapping up iPhones, Macs
Nadella: Apps must run on ALL WINDOWS – PCs, slabs and mobes
Phone egg, meet desktop chicken - your mother
HP, Microsoft prove it again: Big Business doesn't create jobs
SMEs get lip service - what they need is dinner at the Club
ITC: Seagate and LSI can infringe Realtek patents because Realtek isn't in the US
Land of the (get off scot) free, when it's a foreign owner
Samsung threatens to cut ties with supplier over child labour allegations
Vows to uphold 'zero tolerance' policy on underage workers
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
prev story

Whitepapers

Seven Steps to Software Security
Seven practical steps you can begin to take today to secure your applications and prevent the damages a successful cyber-attack can cause.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.