BT profits dive on Italy woes

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Quarterly profits at BT have dived 37% after the firm reported an accounting scandal in its Italian division that cost it more than £500m.

In the three months to 31 December profit before tax fell to £526m, although revenues climbed to £6.1bn. On Tuesday, BT was forced to write down the value of its Italian unit after years of overstating profits. It has now confirmed that Corrado Sciolla, head of continental Europe, will step down over the affair. “The good progress we’re making across most of the business has unfortunately been overshadowed by the results of our investigation into our Italian operations and our outlook,” said Gavin Patterson, BT’s chief executive.

In the final three months of 2016, BT said it had seen record growth at EE, its market leading mobile unit, signing up 276,000 new customers for monthly contracts. It also added 83,000 broadband customers while 260,000 switched to faster fibre connections. But it faces a slowdown in work for the public sector and reiterated its warning of flat group sales and lower profits for 2016-17.

Improper accounting

Allegations of “inappropriate behaviour” at BT’s Italian operation first emerged last summer before the company began conducting an investigation in October. It found improper accounting practices and “a complex set of improper sales, purchase, factoring and leasing transactions”. Total adjustments relating to the investigation of its Italian business amount to £513m, BT said. Mr Sciolla’s departure follows that of a number of BT Italy’s senior management team. The firm said it had also appointed a new chief executive of BT Italy who will take charge on 1 February.

BT shares have fallen 22% since news of the scandal broke on Tuesday.

EE fined £2.7m for overcharging customers

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Mobile phone company EE has been fined £2.7m by Ofcom for overcharging tens of thousands of customers. EE is owned by telecoms giant BT, which acquired the mobile operator last year in a £12.5bn deal. Customers who called the company’s 150 customer services number while roaming within the EU were incorrectly charged as if they had called the US.

Ofcom said the mistake saw customers charged £1.20 per minute, instead of 19p per minute. As a result, at least 32,145 customers were overcharged about £245,700 in total. It added that EE wrongly decided it could not identify the people it overcharged and was proposing to give their money to charity, which would have left them out of pocket. In another breach, despite making it free to call or text the 150 number from within the EU from 18 November 2015, EE continued to bill 7,674 customers up until 11 January 2016. Proceeds of the fine will be passed on to the Treasury.

Ofcom said the penalty reflects a 10% reduction in light of EE’s agreement to enter into a formal settlement and its admission of full responsibility for the breaches. While the majority of customers have now been refunded, EE was unable to identify at least 6,905 customers, who have been left around £60,000 out of pocket. The company has made a donation of just under £62,000 to charity in lieu of the payments owed to these customers. However, Ofcom is requiring EE to make further attempts to trace and refund every customer who was overcharged.  An EE spokesman said: “We accept these findings and apologise unreservedly to those customers affected by these technical billing issues between 2014 and 2015. “We have put measures in place to prevent this from happening again, and have contacted the majority of customers to apologise and provide a full refund. “For those customers that we could not identify, we donated the remaining excess fees to charitable causes in line with Ofcom’s guidelines. “Following Ofcom’s findings, we have made a number of additional improvements to our systems and policies to allow us to better support our customers in the rare occasion that billing issues do occur.”


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