BT warns of disappointment in Global Services arm

IT services division struggling while rest of telco's business remains strong

BT's latest results include one disappointing division

BT has warned that the performance of its Global Services division during the latest financial quarter has been “disappointing” with profit expected to be significantly below expectations.

The supplier said that revenue from the IT services business will be up 15 per cent year on year, but “slower than anticipated delivery of efficiency savings and the continued decline in higher margin UK business” means that profit will be down to about £120m.

In a trading update on BT’s second quarter, the firm identified Global Services as the weak link in an otherwise positive set of anticipated results.

Group revenue for the quarter is expected to be up, but profit and earnings per share will be slightly lower than forecast. The BT Retail, BT Wholesale and Openreach divisions will deliver results in line with expectations.

“BT is performing in line with or ahead of expectations in all but one of its divisions, so the results in BT Global Services are particularly disappointing,” said chief executive Ian Livingston.

“We acknowledge that the performance in this part of the group is unsatisfactory and are committed to taking decisive action to rectify the situation. BT Global Services already has a number of cost efficiency and margin improvement initiatives in place and we are now focused on speeding up the execution of these initiatives which will deliver margin improvement going forward. We intend to set new targets for this division as improved performance is delivered.”

BT Global Services is responsible for some of the highest profile projects in the UK - in particular it is delivering large parts of the £12bn NHS National Programme for IT. The programme has been beset by delays and difficulties, and reports earlier this week suggested that key aspects of the project were grinding to a halt.

BT will report its second quarter results in full on 13 November.