Crisis-hit BT says Italian scandal now under control

LONDON: BT boss Gavin Patterson said an Italian accounting scandal that has convulsed the telecoms group was now under control as he sought to reassure investors who were, he added, rightly angry at one of Britain's biggest companies.

BT stunned investors on Tuesday when it said a complex accounting scandal in Italy had blown a 530 million pound ($665.36 million) blackhole in its accounts, while demand from the British government had slowed, forcing it to cut profit targets for the next two years.

Reporting third-quarter results on Friday, an under-fire Patterson acknowledged that shareholders were unhappy but said they must not lose sight of the fact that its core consumer business was operating well.

"Frankly I am angry that the integrity of BT has been undermined by the wrongdoing of a few individuals in one part of the business," he said. "The situation is now under control, we have already appointed new management and as you would expect we are proactively providing assistance for the Italian authorities."

In results overshadowed by the profit warning on Tuesday that wiped out a fifth of its market value, the group said it had added 83,000 broadband customers in its third quarter, while 260,000 switched to faster fibre connections.

Its shares were down 0.5 percent early on Friday.

BT said 276,000 customers signed up for monthly contracts at EE, the mobile market leader, while churn, or the number of people leaving the network, was low at 1.1 percent.

"We mustn't lose sight of the fact that BT is in good health overall," Patterson said.

The firm also said it was confident it could reach an agreement with regulator Ofcom over how the company runs the national broadband network, seeking to resolve a long-running battle that has preoccupied the company and the wider sector in Britain.

He said changes he had already made in how the unit was managed within BT could "form the basis for a fair, proportionate and sustainable settlement".

BT said profit before tax was down 37 percent in the third quarter, at 526 million pounds.