Money

BT hands £14 million back to customers after compensation error



BT is forking out £14 million to business customers after it underpaid compensation for network outages and faults.

The firm’s Openreach broadband arm admitted the error in its first quarter results and confirmed customers of its Ethernet Backhaul Direct – a means of super-fast data transfer – would be refunded.

BT said: “Openreach have recently identified that they have been underpaying service level guarantee compensation for their Ethernet Backhaul Direct product since October 2016.

“Openreach have informed Ofcom and are informing those external communications providers who were affected.

“Openreach are in the process of refunding in full and estimate that the total due is around £14m, which has been fully provided for.”

After a quarter in which its EE mobile division launched the UK’s first 5G mobile network in six cities, the group posted reported and adjusted revenue of £5,633 million, down 1% and affected by decreases in consumer, enterprise and global.

 

Adjusted EBITDA (earnings before interest, tax, devaluation and amortisation) was down 1% at £1,958 million driven by lower revenues, higher spectrum fees and content costs. Reported profit before tax was £642 million, down from £704 million a year ago.

Arlene Ewing, investment manager at Brewin Dolphin, said: “BT’s share price has consistently fallen in recent months, and sits at five-year lows. In its last update the big focus for investors was on changes to the company’s dividend, which remained the same and there is no further news today – in this case, no news is good news.

“Capital expenditure remains on the up at BT and revenue and profits are falling slightly – but the company has beaten analyst expectations.

“The return on its current investment strategy won’t be seen for some time; but, in the interim, investors will be keeping a close eye on how BT walks the tightrope between delivering the UK’s full-fibre broadband strategy and offering a high yield to shareholders.”

Fiona Cincotta at cityindex.co.uk said: “BT hasn’t mentioned the outlook for its dividend today but all the ingredients are still in place for a cut in the not-too-distant future.

“Earnings remain under pressure from regulations last year that forced telecom companies to allow customers to limit the size of their mobile bills, all while competition in the sector heats up.

“BT’s enterprise business is meanwhile suffering from a structural decline in the traditional calls market, amid heightened business uncertainty caused by Brexit.

“New chief executive Philip Jansen is doing a decent job keeping a lid on costs, though the market could be disappointed to see that staff expenses have risen in the Openreach broadband division during the first half.

“With billions of dollars of spending required to keep BT ahead of the high-speed broadband pack, the earnings situation will need to improve markedly to minimise what is looking like an almost inevitable cut to the dividend.”



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