BT has announced a 3% rise in adjusted profits to £816 million in its first quarter, though underlying revenue fell 2%.
BT’s consumer division posted a 2% rise inadjusted revenues, but was dragged down by sales declines in Openreach and BT’s wholesale and business operations.
Net debt rose £2.4 billion to £11.2 billion, thanks to a £2 billion bond issue, which has been handed to the pension scheme to plug the deficit.
BT states that its independent actuaries, Willis Towers Watson, got the accounting deficit wrong in March, they under-estimated its size by £0.5 billion.
Shares rose 3% in early morning trading.
Laith Khalaf, Senior Analyst, Hargreaves Lansdown: “BT’s consumer business is keeping the whole ship moving forward at the moment. Regulatory pressures are hitting Openreach, and BT’s revenues from business and the public sector are in decline. Overall profits are up this quarter, but times are still tough for the UK telecoms provider.
“The pension scheme is taking up significant cash, with £2 billion gobbled up in this quarter and a further £1.25 billion to come in the nextyear, to go towards plugging the pension black hole. On that front BT says its independentactuaries miscalculated the pension scheme liabilities in March, under-stating the accounting deficit by £0.5 billion. The accounting deficit tells us more about bond yields than it does pension obligations, and has no effect on cash flows, but clearly this slip doesn’t exactly help to inspire confidence.”
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