The revelation of improper accounting practices, sales, purchase, factoring and leasing transactions at BT\u2019s Italian business has seen the telecoms and services giant\u2019s pre-tax profit for the third quarter to 31 December plummet by 37% year-on-year to \u00a3526m.
News of the scale of the scandal \u2013 which has been under investigation by forensic auditors at KPMG since the summer of 2016 \u2013 broke on 24 January 2017 , when BT revealed it was trebling an existing write-down on the Italian unit to \u00a3530m.
BT\u2019s shares lost more than 20% of their value as a result of the news, which has also cost Corrado Sciolla, the head of its European operations, his job.
\u201cThe good progress we\u2019re making across most of the business has unfortunately been overshadowed by the results of our investigation into our Italian operations and our outlook,\u201d said BT chief executive Gavin Patterson.
\u201cWe\u2019ve undertaken extensive investigations into our Italian business and I am deeply disappointed with the unacceptable practices by some that we\u2019ve found. This has no place at BT, and it undermines the good work we\u2019re doing elsewhere in the group,\u201d he said.
Among some of the bright spots overshadowed by the scandal were a 32% bump in group-wide revenue to \u00a36.13bn, record growth at EE, and the highest ever fibre-based broadband net connections in Openreach , at close to half a million.
However, BT said it still faced significant headwinds in its public sector and international corporate businesses. As a result of these pressures, it expects underlying revenue and earnings (excluding EE) to be roughly flat for the upcoming 2017-18 financial year.
BT also noted the impact of the UK\u2019s Brexit vote, which has caused volatility on revenue and cost thanks to the weakening of sterling, alongside uncertainty around the nature of the UK\u2019s future trading relationships with the European Union (EU).
Kester Mann, senior analyst \u2013 operators at CCS Insight, said it was inevitable that BT\u2019s results would be overshadowed by the Italian job and the public sector slowdown, but added there was much to be encouraged by, such as the strong results from EE and Openreach.
\u201cNevertheless, sentiment from the results is likely to be downbeat with the Italian fiasco adding to a growing list of challenges,\u201d said Mann.
\u201cThese include a huge pension deficit, the ongoing battle with Ofcom over the future structure of Openreach, escalating costs to win lucrative TV sports rights and increasing competition in the UK multiplay market,\u201d he said.<\/p>\n

© Source: http:\/\/www.computerweekly.com\/news\/450411779\/BT-profits-plunge-after-Italian-accounting-scandal<\/a>
All rights are reserved and belongs to a source media.<\/span><\/p>\n