BT's pension deficit doubles to £5.8bn

BT has revealed that its pension fund deficit has doubled to £5.8bn in the past three months.

But BT insists that the dramatic increase does not reflect a fall in the value of the pension scheme's investments, according to the Telegraph.

Instead, BT said the deficit increase was caused by it being forced to change its accounting practices to take into account a higher inflation rate.

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Analysts have expressed concern that a triennial review of the scheme next year could reveal a deficit of up to £11bn, but BT has a market valuation of only £9.5bn.

BT has agreed to pay a further £525m into the fund for the next three years, no matter what the triennial review finds.

News of the pension deficit increase coincided with BT's quarterly financial results, which showed a 45% drop in pre-tax profits to £272m and a 43% fall in earnings per share from 4.9p to 2.8p.

But group revenue for the three months ended 30 June rose 1% to £5.2bn compared with the same period a year ago, pushing shares up by more than 10%.

BT Global Services, which provides IT and telecommunications services, made a £124m quarterly loss, but earnings before interest tax and depreciation doubled on the previous quarter to £62m.

Ian Livingston, chief executive at BT said, "Global Services is making progress, although there is still much to do."