Small investors see their shares in BT plummet by £900m

THE plunging price of BT shares has seen the value of stock owned by the company’s 700,000-strong army of small private investors plummet by £900million as the company battles with the effects of an accounting scandal.

BT remains one of the most popular stocks for private investors more than 30 years after it became the first of the major state-owned industries to be privatised by Margaret Thatcher’s Government.

Small investors have up to 1,600 shares each in the media and telecoms company, which means the value of their combined shareholding amounts to £3.3billion at Friday’s closing price of 302p.

This was down from £4.2billion before the company announced on Wednesday that the problems at its Italian division were much worse than previously thought.

About £8billion was wiped off the total value of BT’s shares on Wednesday after revelations that its Italian managers allegedly depressed costs to inflate profits.

It was the worst ever fall in the share price since BT was privatised in 1984.

‘It looks like the major damage has been done in terms of share price, but if a retail investor is just holding BT then I think they should be thinking about diversifying,’ said Laith Khalaf, senior analyst at Hargreaves Lansdown.

BT’s chief executive Gavin Patterson said it would have to write down the value of its Italian business by £530million.

The company also warned that a slowdown in Government contracts in the UK would depress earnings for the next two years.

Its profits for the three months to the end of December fell by 37 per cent to £526million.