BT's Italian Accounting Scandal Deepens -- Update
January 24 2017 - 03:37AM
Dow Jones News
By Ian Walker
LONDON-- BT Group PLC (BT. A. LN) said a bigger-than-expected
530 million pound ($661 million) write-down related to an
accounting scandal at its Italian business will weigh down on
earnings for the next two years.
The British telecoms operator originally expected to take a
charge of GBP145 million.
Since the announcement of an internal investigation into the
Italian business last October, including an independent review by
auditing firm KPMG LLP, BT said it has found that "the extent and
complexity of inappropriate behavior in the Italian business were
far grater than previously identified."
The activity involved improper sales, purchase, factoring, and
leasing transactions. They led BT to overstate its Italian profit
over "a number of years."
The charge on its Italian business reduced adjusted revenue and
adjusted earnings before interest, taxes, depreciation and
amortization in the three months to end-December by GBP120 million,
BT said on Tuesday.
For the year to end-March, adjusted revenue is set to drop by
GBP200 million, and adjusted revenue would be GBP175 million lower,
the company said. BT added that it expects a similar impact in
fiscal 2018.
"The improper behavior in our Italian business is an extremely
serious matter, and we have taken immediate steps to strengthen the
financial processes and controls in that business," BT said.
As part of this the company has suspended a number of BT Italy's
senior management team who have now left the business. BT has also
appointed a new chief executive of BT Italy who will take charge on
Feb. 1.
In its trading statement, the U.K.'s former monopoly operator
said it still expects to increase its yearly dividend by 10%, while
fiscal third-quarter earnings were in line with market expectations
after stripping out the impact of the write-down.
(END) Dow Jones Newswires
January 24, 2017 03:22 ET (08:22 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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