BT faces shareholder ire over Italian accounting scandal
Telecoms giant BT will face shareholders today as it looks to recover after a costly Italian accounting scandal earlier this year. Investors will gather for the group's annual general meeting in London just six months after BT first revealed the accounting debacle, which saw it book a £530m write-down and wiped £8bn off its stock market value in January.
It comes amid reports BT has hired consultants McKinsey to conduct a review that could see a radical corporate shake-up. One option said to be under consideration is the merger of its struggling global services unit with its business and public sector division.
It could be a tumultuous last AGM for chairman Sir Mike Rake before he stands down after 10 years at the helm, to be succeeded by Rio Tinto chairman Jan du Plessis.
The affair at BT Italia has hit shares and profits, while also claiming the scalp of BT's European head, Corrado Sciolla.
It also saw chief executive Gavin Patterson and outgoing finance boss Tony Chanmugam stripped of their annual bonuses.
The group revealed annual profits plunged 19% to £2.3bn earlier this year as its woes were compounded by a £342m Ofcom fine and related compensation payments.
BT has also announced 4,000 job losses worldwide as part of a restructuring of its Global Services unit.
The AGM is likely to see investor anger over the accounting scandal, with one of BT's major shareholders, Royal London Asset Management, raising concerns over "governance and oversight" of the auditors in charge at the time.
PwC is lined up to replace KPMG as auditor after 2017-18, but Royal London, which has a stake in BT worth around £236m, plans to abstain on the re-election of the chairman of BT's audit committee. Ashley Hamilton Claxton, corporate governance manager at Royal London, said: "We welcome the steps taken by the board to adjust executive pay following the accounting irregularities in BT's Italian operations and the pay proposals have our full support this year.
"Although management has been swift to address the issues in the Italian business, we have abstained on the re-election of the auditors and the re-election of the chairman of the audit committee to reflect our concerns about the governance and oversight of the audit."