LONDON (Reuters) - The outgoing chairman of BT BT.L was forced to defend his handling of a "perfect storm" of troubles that hit the British company this year, saying he had battled to stabilise the business and prevent damage from spreading.
Britain’s biggest telecoms group was rocked in January when it cut profit forecasts due to an Italian accounting scandal and a slowdown in key government work, wiping 8 billion pounds off its value in just one day.
The disclosure weakened BT as it fought a bitter standoff with the British regulator over its management of the country’s core broadband network, giving the impression that it was fighting battles on multiple fronts and not properly in control of its sprawling business.
Investors used the company’s annual meeting on Wednesday to demand answers as to why the company had not seen the crisis coming. At 289 pence, BT shares remain below the 303 pence level to which they fell on the day of the January profit warning.
“(I am) deeply disappointed in regard to the share price,” Chairman Mike Rake told shareholders.
“Unfortunately we have had a perfect storm as regards the share price,” he said, citing issues such as the impact from last year’s Brexit vote, the accounting scandal and the company’s pension deficit.
Since January BT has struck a deal with regulator Ofcom to legally separate its national network from the rest of the business - avoiding the threat of a full breakup - and has announced plans to tackle the source of the Italian scandal by cutting 4,000 jobs and replacing its Global Services boss.
Rake, who will be replaced later this year by Jan du Plessis, chairman of the world's second-biggest miner Rio Tinto RIO.AX, said he had sought to avoid inflicting further harm when asked why more people had not taken responsibility for the scandal.
“You cannot take steps that would further damage the company in a crisis,” said Rake, who will step down after 10 years in the role.
The twin shocks to the business, which brought an abrupt halt to BT’s gradual recovery since the 2008 downturn, have also forced it to rein in its dividend growth forecasts and cut management pay.
Chief Executive Gavin Patterson did not get a bonus after a difficult year, meaning his total pay package fell in 2016/17 to 1.3 million pounds, down by 4 million pounds on the year before.
Reporting by Paul Sandle; writing by Kate Holton; editing by
Our Standards: The Thomson Reuters Trust Principles.