Telecommunications company BT Group PLC on Thursday said profits tripled in the third quarter, but its shares slumped after regulators questioned its plans to close a massive hole in its pension fund.
BT shares were down 6.6 percent at 122.7 pence in early trading on the London Stock Exchange even though the company reported a profit of 178 million pounds ($279 million) for the three months ending Dec. 31 from 62 million pounds a year earlier. Revenue fell 4 percent to 5.2 billion pounts, but underlying costs were reduced by 13 percent.
Investors, however, focused on BT's plan to close a 9 billion pounds ($14.1 billion) shortfall in its pension fund, a record for a British company.
"The Pensions Regulator's initial view is that they have substantial concerns with certain features of the agreement," BT said. "BT and the trustee will continue to work with the Pensions Regulator to help them complete their detailed review."
The company gave no details on the regulator's concerns, and said it could not predict when the regulatory review would be completed.
BT said the pension fund trustee had approved the company's proposal to pay 525 million pounds a year for three years into the fund, rising to 583 million pounds in the fourth year and increasing by 3 percent annually for 13 years afterward.
The pension fund is Britain's largest, with 370,000 members.
"If we return to bear market sentiment the pension issue could weigh on BT share price recovery, but we continue to believe the real, sustained and positive momentum of the operational recovery is the major story here," said Morten Singleton, analyst at Collins Stewart.
Revenue, profit and earnings before interest, taxes, depreciation and amortization were all at the top range of the analysts' consensus forecast, Singleton said.
For the nine months, BT turned a profit of 819 million pounds, down 2 million pounds from a year earlier, on revenue of 15.55 billion pounds compared to 15.9 billion pounds in the previous period.
Source: AP News