BT shares hit as Italy and pension woes impact group

● Telecoms giant sees half- year profits down 22% ● But boss says underlying outlook remains decent

Te le co ms giant BT’s latest quarterly earnings have been dragged down by continuing problems dogging its Global S er vices division and higher costs for pensions and sports rights.

It sent shares in the group, privatised in 1984, tumbling to four-year lows yesterday, as chief executive Gavin Patterson also said that good performances at BT’S consumer operations were not enough to offset pressure son its operations serving business and governments.

Shares in the company, which had already fallen 30 per cent in the past year, fell 2.6 per cent to 253.6p

BT’S pre- tax profits tumbled 22 per cent to £ 1.1 billion in the six months to 30 September, with a 1 per cent 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 nearly 40 per cent to £81 min Q 2.

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 £ 7.7bn at the latest period end, down from £ 8bn at the end of June.

Patterson said the company was taking “robust action” to turn around Global Services, which has seen a slowdown in demand from multinationals and which was hit by an accounting scandal in Italy in its last financial year.

A restructuring of the unit, announced in May, was progressing well, he added, and 1,600 people had left the business and another 1,500 jobs would go in the second half.

BT 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”.

The group interim dividend is pegged at 4.85p. BT’S television arm, focused on the European Champions League and English Premier League football coverage, had a weak quarter, with net additions of 7,000 compared with 63,000 a year ago.

The company agreed in March to pay £ 1.2bn to retain Champions League right from 2018 to 2021, while its current three-year Premier League deal costs £ 960m.