BT has paid £225 million to Deutsche Telekom and Orange over its Italian accounting scandal and shaken up its management team with a new consumer business led by mobile arm EE's CEO.
The payment was revealed in its first quarter results, in which profit before tax plummeted by 42 percent to £418 million.
It relates to when BT bought EE from shareholders Deutsche Telekom and Orange in 2015 for £12.5 billion. Deutsche Telekom took a 12 percent share and Orange a four percent stake in BT in addition to varying cash amounts.
The stakes were based on future financial performance, which was hit by the revelation in January that BT Italia had been overstating profits for several years.
Rather than face potential legal action, BT chose to pay both telcos £225 million to settle any future claims. Deutsche Telekom has taken the bulk of the payment, although exact values were not disclosed.
Stripping out the one-off payment, and other exceptional costs, adjusted EIBTDA for the quarter was £1.79 billion, down two percent or 2.5 percent on a like for like basis. Sales nudged up by one percent to £5.84 billion.
EE was the bright star for the quarter, with adjusted revenue up four percent to £1.29 billion, its third consecutive quarter of sales growth, and adjusted EBITDA up 19 percent to £335 million.
Its mobile base hit 29.8 million in the quarter, but its net adds of 210,000 were lower than the 244,000 added a year ago. The shift away from prepay continued with 385,000 customers vanishing. Its 4G base has now hit 19 million.
However, it warned of higher costs in its third quarter results because of the launch of new smartphones, as well as the costs of abolishing EU roaming charges hitting in the shorter term.
Elsewhere, increased sales of seven percent to £1.26 billion were not enough for its Consumer arm to report a three percent decrease in EBITDA to £233 million. BT blamed investment in customer service, its new Premier League rights contract and the closure of its legacy Vision TV platform.
In fixed line, BT said it passed 26.8 million properties with its superfast fibre broadband and is aiming to connect 12 million premises to ultrafast services by 2020.
Sales at Openreach, which removed BT from its branding earlier this month in its journey to become a legally separate entity, ticked up one percent to £1.27 billion, failing to stop an 18 percent fall in EBITDA to £614 million, largely due to increased business rates and pension charges.
It said it had made FTTP or G.fast services available to around 550,000 homes and reached 437,000 net fibre connections.
Its Business and Public Sector wing had an underwhelming quarter, with sales down four percent to £1.13 billion and EBITDA down six percent to £336 million. BT blamed declines in revenue from public sector.
Global Services continued to count the cost of the Italian scandal, with EBITDA down 39 percent and revenues flat at £1.24 billion.
Meanwhile, EE CEO Marc Allera will take the helm at a new Consumer business from 1 September, bringing together BT's Consumer and EE wings.
It will span fixed and mobile networks, products and services, and content, operating across the BT, EE and Plusnet brands.
John Petter, CEO of BT Consumer for the past four years, will leave the company to pursue other roles.
Cathryn Ross, CEO of UK water regulator Ofwat, will also become the new Director of Regulatory Affairs following the department of Chief Strategy officer Sean Williams to leave the company.
Paolo Pescatore, Director, Multiplay and Media, CCS Insight, said the new Consumer business "makes perfect sense" and will strengthen the company.
He added: "Some tough decisions lie ahead. The move initially to integrate the financials and now the lines of business inevitably means that the company will move towards one brand much more likely.
"Combining the billing and service operations will continue to take time before we truly see a single bill from BT for all services. For consumers there will be significant long term benefits."