BT’s buy of EE helps profits but pension deficit widens

BT’s takeover of mobile operator EE looked to bear fruit on Thursday, as revenue jumped by a third.

That helped offset a plunge in spending by the government and drew some attention away from an alarming leap in the pension deficit.

That now stands at £9.5 billion, up from £6.2 billion just three months ago. Some warn that the pension hole could eventually force BT to cut its dividend.

BT blamed “falling corporate bond yields and higher expected inflation” for the rising deficit. It added the restarting of quantitative easing had hit fund returns.

The telecom giant saw a 35% surge in sales to £6 billion in the three months to September 30. Those sales would have been up a mere 1% without EE.

Profits rose 5% to £671 million.

Chief executive Gavin Patterson told the Standard the cut in public spending was hurting. “Central government is a very difficult environment at the moment. A further challenge for us is that we have a number of major contracts winding down,” he said.

BT is waiting for the outcome of an Ofcom investigation into its broadband Openreach arm. It could be split from the main company.

BT Sport added 63,000 new clients taking the total to 1.7 million. BT is now the home for all of Australia’s Test Matches and one-day games played in Australia, signing up Michael Vaughan, Graeme Swann, Kevin Pietersen and Ricky Ponting to offer expert analysis.