BT counts the cost of securing sports rights

Telecoms: Shares slump to their lowest level since 2013 as BT’S earnings are hit by problems in its global services arm, higher pension costs and increased business rates

Shares in telecoms giant BT slumped to their lowest level in more than four years as the cost of securing sports rights and problems in the company’s global services arm weighed heavily on profits.

The major Dundee employer said it had also been affected by higher pension costs and business rates as well as investing in improving customer services.

Results for the second quarter of the year showed a 4% drop in quarterly earnings to £1.8 billion.

Adjusted pre-tax profits for the quarter, which ran to the end of September, were down 10% to £789 million.

The results caused the share price to fall 6.9p to 253.6p, its lowest level since January 2013.

There was a good performance by the company’s mobile phone arm EE, with earnings up 16% to £326m in the second quarter after revenues rose 4%.

It added 279,000 contract mobile customers – a total of 17.3 million.

Chief executive Gavin Patterson 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.

“As the UK’S leading converged telecommunications provider we continue to make positive progress on all our strategic priorities.

“Improving customer experience is critical to our success and we have seen continued positive progress underpinned by investments in operational improvements, increased network quality and customer-centric product development.”

Mr Patterson said BT was committed to delivering ultrafast fibre to 12 million premises by the end of 2020.

The company said it was taking “robust actions” to improve the performance in its global services business, axing 4,000 jobs as part of a heavy restructuring in the division, which operates across 180 countries.

BT also spent another £6m in investigation costs over its recent Italian accounting scandal, which resulted in a £530 million write-down.

The firm’s pension deficit fell from £8bn to £7.7bn during the quarter.

The company maintained its 4.75p dividend but said this would fall by 30% in future years.

Picture: Kim Cessford.