Fall in profits for BT in first quarter

BT has reported a 42% fall in Q1 profits due to a settlement with Deutsche Telekom (IOB: 0MPH.IL - news) and Orange (LSE: 0OQV.L - news) over an Italian accounting scandal.

The German and French groups had bought into BT when they sold their joint venture, mobile operator EE, to the business.

BT, which revealed it had a £530m hole in its Italian accounts in January, said it had settled a warranty claim with the two investors, with a charge of £225m.

At the time the Italian accounts situation was revealed, BT issued a profit warning and Sky News reported that its market value had plunged by more than £7bn , with shares down by 21% in one day.

BT said on Friday that its pre-tax profit for the first quarter fell to £418m, which was down one percent on an adjusted basis but well below the consensus of £751m.

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