BT profit hit by sports rights and global services

The telecoms giant is axing 4,000 jobs in its global services business

BT's EE mobile business helped offset some of the global services troubles (PA)

Telecoms giant BT has revealed a 4 per cent slump in quarterly earnings as the group counted the cost of heavy investment in sports rights and ongoing woes in its troubled global services arm.

The group saw adjusted earnings drop to £1.8bn in its second quarter to 30 September, leaving half-year earnings 3 per cent lower at £3.6bn.

On a bottom-line basis, pre-tax profits tumbled 22 per cent to £1.1bn in the six months to 30 September, with a 1 per cent fall to £666m in the second quarter.

BT said it took a hit from deals for football and sports rights and investment in customer service as well as its global services arm, which saw earnings tumble by 39 per cent to £81m in the second quarter.

The group confirmed it was expecting to consult with employees "shortly" over changes to its pension scheme but said this was still under review.

BT is reportedly planning to close its defined benefit pension scheme to future accruals in a bid to plug a gaping funding hole.

It had a pension deficit of £7.7bn as at the end of September, down from £8bn as at the end of June.

Gavin Patterson, chief executive of BT, said: "Our first-half results are in line with our expectations as encouraging results in our consumer-facing lines of business, notably EE, helped offset ongoing challenges in our enterprise divisions, in particular global services.

"Given our underlying business performance, we are maintaining our outlook for the year."

BT said it spent another £6m in investigation costs in the first half over its recent Italian accounting scandal, which resulted in a £530m write-down and a major fall in its share price, knocking £8bn from BT's market value.

It said during the first half "it continued to take steps to improve the control environment in our Italian business but recognise that we have further activities to complete during the second half of the year including the assessment of our internal controls over financial reporting".

BT said it was taking "robust actions" to improve the performance in its global services business.

It is axing 4,000 jobs as part of a heavy restructuring in the division, which operates across 180 countries.

But its EE mobile business helped offset some of the global services troubles in the first half, with EE earnings up 16 per cent to £326m in the second quarter after revenues rose 4 per cent.

It added 279,000 contract mobile customers, taking the total to 17.3m.

Shares in the group lifted by nearly 1 per cent after BT held its full-year outlook and interim shareholder dividend payout.

PA