UK telecommunications company BT is confident an accounting scandal concerning its Italian division will have no effect on its pursuit of TV rights acquisitions.
It was last October that the telecom company investigated it’s accounting practices in Italy, and found a complex set of improper sales, purchase and leasing transactions. This led to a writedown to the business of £145m, and has now more than tripled to around £530m. BT Italia provides phone and IT services for business, and has contracts with some large firms.
Although the Italian division only accounts for 1% of its earnings, the disclosure of the scandal being worse than anticipated dropped it’s stock value by 20%. As a result, BT said profits would be £300m lower than previously expected for this year, down from a forecast £7.9bn to £7.6bn.
To make matters worse, according to Reuters Milan prosecutors have opened an investigation into BT’s Italian unit over alleged false accounting and embezzlement.
Impact on TV rights
The call for tenders for UEFA’s Champions League and Europa League TV rights cycle 2018-2021 is fast approaching. This is a key sports property for BT Sport, a property in which they paid £897m on a three year deal back in 2013 for all Uefa Champions League and Europa League rights in the UK.
This scandal could impact BT’s ability to retain the rights as they compete with SKY, who would love to take advantage and outbid its competitor. If recent trends continue, the price to acquire TV rights for football will rise significantly.
However, a BT spokesman told UK newspaper The Mirror: “Today has been disappointing but BT remains a strong company that is able to consider new sports rights should the price be right. We will generate around £2.5bn of cash this year and that will grow to more than £3bn next year. That gives us plenty of options.”