Profits plunge 40% as BT coughs up £225m to avoid court battle

Also appoints EE chief exec Marc Allera as consumer boss

BT's profits plunged 42 per cent to £418m for the first quarter, as the former state monopoly paid off £225m in settlements in relation to the accounting scandal in Italy.

The biz coughed up the cash rather than go to court with Deutsche Telekom and Orange, after it wrote down the value of its Italian unit by £530m in January when it uncovered years of "inappropriate behaviour".

Sales rose 1 per cent to £5.8bn, compared to the same period last year.

BT has also paid £42m in the quarter to Ofcom over its failure via Openreach to compensate other telecoms providers for delays to fixing leased line "Ethernet" services.

Compensation payments to other comms providers are currently being finalised as part of its discussions with the affected parties. "We continue to estimate the total compensation payments will amount to £300m," it said.

In a shake-up of its organisational structure, the biz has merged its consumer units of BT and EE. Marc Allera, currently chief exec of the EE business, has been appointed to lead a newly created consumer division.

In addition, Cathryn Ross, currently chief exec of Ofwat, has been appointed as director of regulatory affairs.

Paolo Pescatore, director of multiplay and media at analyst firm CCS Insight, said: "As BT emerges from a turbulent 12 months, a recent shake-up of personnel seeks to bring stability to the under-pressure organisation.”

BT said it now has 100,000 customers connected to ultrafast broadband technology, using its fibre-to-the-premise connections and network.

The company will also open 100 EE stores in Sainsbury’s and Argos locations over the next two years.

The company said it continues to see headwinds in our UK Public Sector business.

Gavin Patterson, chief exec, said it is consulting with Ofcom, government and other communications providers to build the investment case to achieve this outcome.

“Our new Consumer business will operate our three distinct brands – BT, EE and Plusnet – to leverage our position as the largest and only fully converged player in the market, spanning fixed and mobile networks, consumer products and services as well as content.

“We will continue to simplify and streamline the business and rationalise our costs as demonstrated by our ongoing performance transformation programme. Our businesses are leaders in their core segments and as we drive the business forward I am confident in the outlook for our company.” ®

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