BT is taking a £340m hit after a review of its BT Global Services group, the provider of NHS IT services in the capital.
The company also warned that further substantial writedowns may be necessary following negotiations on major contracts.
The one-off charge comes after a new management team were installed at BT Global Services, which, with external advisers, reviewed the group's finances and major contracts.
“The reviews cover the largest and most complex contracts and take into account a more cautious view of the recognition of cost efficiencies and other changes in assumptions and estimates, particularly in light of the current economic outlook,” BT said.
“The performance of the rest of the group is ahead of expectations for the third quarter but unfortunately this will be more than offset by the issues in Global Services,” said Ian Livingston, chief executive of BT.
BT also warned, “The contract reviews, together with ongoing commercial discussions in respect of two of our largest contracts, are likely to be completed during the fourth quarter.
“These may result in further substantial one-off non-cash charges in the current financial year, the size of which will be highly dependent on the outcome of the ongoing discussions.”
KPMG, Unilever, NHS, Ministry of Defence (MoD) and Department for Works and Pensions (DWP) are among BT Global Services customers. More than 90 percent of the UK’s financial institutions use secure data networks supplied by BT Global Services.
Veteran analyst Richard Holway said that 15 of the group's 17 largest contracts had been reviewed, which had resulted in the £340m hit announced today.
"The assumption is that the two further contracts were BT’s NHS contracts," said Holway.
When analysts asked Livingston about BT's potential exposure, he replied "many hundreds of millions".