BT takes £225m hit over Italy accounting scandal

Profits at telecoms group BT have fallen after it took a £225m charge related to its Italian accounting scandal.

BT is paying the money to Deutsche Telekom and Orange to avoid legal action over the issue.

The two companies now hold stakes in BT as a consequence of the deal that saw them sell the EE mobile network to the UK company.

The charge led to BT's first-quarter profits falling 42% to £418m.

In January, BT wrote down the value of its Italian unit by £530m after it said it had uncovered years of "inappropriate behaviour".

It said it had found evidence of improper accounting practices, leading to "the overstatement of earnings in our Italian business over a number of years".

The Financial Reporting Council (FRC), the UK's accountancy watchdog, is investigating the auditing of BT's financial statements for the years 2015-17.

Separately, BT announced that Marc Allera had been appointed as chief executive of its combined BT consumer business, while Cathryn Ross - currently chief executive of Ofwat - will become its new director of regulatory affairs.