BT Group Shares Suffer Dramatic Fall After “improper” Italian Accounting

Billions of pounds have been wiped off BT Group’s share price this morning (currently trading at 310p, down by nearly 19% from 382p yesterday) after the operator’s business in Italy was hit by an “improper accounting practices” fiasco (i.e. they’ve overstated their earnings by £530m).

The operator has been busy examining the historical accounting practices of its Italian business for awhile and in October 2016 they uncovered a number of issues with improper sales, purchase and leasing transactions. At the time the size of their overstated earnings had been pegged at £145m, but since then BT and KPMG have conducted a full review and today the scale of “inappropriate behaviour” has finally become clear.


The realisation that the accounting scandal is much worse than first thought and that their financial results have been overstated for several years has given the city somewhat of a shock. On top of that BT Group’s CEO, Gavin Patterson, has added fuel to the fire by warning that the “outlook for UK public sector and international corporate markets have deteriorated“.

Gavin Patterson, BT Group CEO, said:

“We are deeply disappointed with the improper practices which we have found in our Italian business. We have undertaken extensive investigations into that business and are committed to ensuring the highest standards across the whole of BT for the benefit of our customers, shareholders, employees and all other stakeholders.”

As a result of all this BT Group is predicting no revenue growth for the next couple of years, with profits set to take a noticeable hit. Apparently several executives at BT Italy have already been suspended and the operator has appointed a new boss for the business (taking office from 1st February 2017).

The manipulations were said to be very complex and “specific” to BT’s Italian business. Patterson doesn’t believe that the same problem exists in the UK or at any of their other divisions around the world, although they are conducting checks to make sure. Going forward BT will also be examining why it took them so long to spot the problem and similarly why their auditors failed to spot it.