Jul 28, 2017
BT profits tumble after £225m Italian scandal payout
BT has taken a fresh hit to its profits in the wake of its Italian accounting scandal after agreeing to pay Deutsche Telekom and Orange £225m to avert potential litigation related to the sale of EE. The two continental telecoms companies sold EE to BT for £12.5bn with both taking sizeable stakes in the then booming British company. This share fall following the Italian accounting scandal, which was not spotted by BT management or its auditors, had opened the door for litigation. Orange has already partly sold down its stake in BT at a loss while Deutsche Telekom took a €2.2bn hit on the value of its 12 per cent stake earlier this year. BT still faces class actions in the US related to the Italian scandal. BT had warned on profits in January when it revealed a "Complex fraud" in the Italian business, which triggered a £530m write-off after it unwound contracts signed by the unit.
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