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Global Services still problem child for BT

Challenging market conditions and lost customers at its IT services unit weigh heavily on BT’s results in the third quarter

BT’s ICT services division, BT Global Services, was the main contributor to a 3% slide in reported sales of £5.97bn during the telco’s third quarter to 31 December 2017, due in part to ongoing challenging market conditions, but also to a reduction in IP Exchange volumes after a strategic decision to ease back on low-margin business.

The unit was also hit by the end of a major contract in Brazil, and the decision at a major unnamed US customer to insource its IT services, said BT. Global Services’ total order intake was £1.1bn for the quarter, down 11%, and on a rolling 12-month basis was down by 25% at £3.7bn.

In a statement, BT CEO Gavin Patterson made no mention of the long-running troubles afflicting Global Services – which is currently in the process of undergoing a major restructure – referring to results that fell “broadly in line with our expectations”.

Patterson spoke instead of BT’s plans, through the independent Openreach unit, to expand the deployment of full-fibre broadband across the UK and a reciprocal deal with Sky to bring a number of its sports and entertainment channels to the BT TV platform.

“We are delivering against our strategy, capitalising on opportunities and responding to market challenges with a robust set of actions,” said Patterson. “Looking ahead, we’re confident in the steps we are taking to improve the performance on BT for all our stakeholders.”

But across the BT Group as a whole, mobile operator EE was the only unit to see any growth in revenues, up 4%. Revenues at BT Consumer and Openreach were flat, while at all other units they declined.

Read more about BT Global Services

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BT also provided an update on the steps it is taking in response to the accounting scandal at its Italian business, which cost several top executives their jobs. It said it still has further activities to complete during 2018, including the assessment of its internal controls over financial reporting as of 31 March for the purposes of the US Sarbanes-Oxley Act of 2002, which was enacted after the Enron and WorldCom scandals. It also plans to refile its local statutory accounts for BT Italia for 2016-17 later in February.

Overall, adjusted earnings before interest, taxes, depreciation and amortisation at BT fell by 2% to £1.82bn during the third quarter, while pre-tax profit for the quarter swelled by 25% to £660m.

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