BT Global Services takes £340m hit

Almost £1.5bn was wiped off BT’s market value on Thursday after the telecoms group said it had taken a big hit at its global services arm, the division responsible for three key NHS contracts.

BT Global Services will take a charge of £340m following a review of 15 of 17 of Global Services largest contracts.

Further “substantial” one-off charges can be expected in the current financial year, which ends on March 31, as the company reviews the final two contracts, BT said.

BT said the contract reviews “involve a reassessment of the estimates and assumptions associated with certain major contracts” and had been conducted jointly with external advisers. “The reviews cover the largest and most complex contracts,” the company said in a trading statement.

"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, CEO of BT.

Although BT did not indicate whether its three big NHS contracts were involved, the company is known to be involved in a major contract renegotiation for its billion pound contract to upgrade NHS information technology in London.

A deal known as Change Control Notice Three (CCN3), that would deliver more tailored systems to London hospitals, is believed to be remain unsigned.

"The first job of the new management team in Global Services and the new group finance director has been to review the financial position of Global Services and its major contracts," said Livingston.

He added that the review reflected “changed circumstances and a more cautious view of the delivery of cost efficiencies and contract performance”. A review of Global Service’s operations is also being undertaken as part of cost savings initiatives.

In November BT announced it was cutting 10,000 workers, including several thousand in Britain.