London : A looming and potentially lengthy row over pensions at British Telecoms (BT) overshadowed solid third-quarter results from the former state-owned BT company, sending its shares to a six-month low yesterday.
BT used its third-quarter results to announce a long-awaited triennial pension evaluation which put the deficit at £9 billion (Dh51.74 billion), and said it would implement a 17-year scheme to fund it.
Under the plan, BT will continue to make deficit payments of £525 million per year for three years, as previously announced, rising to £533 million in real terms for the following 14 years.
It said the plan would have to be submitted to the pensions regulator for review, which has already indicated it has "substantial concerns" with certain features of the agreement.
Chief executive Ian Livingston told reporters the regulator would continue to look at the plan and could then decide to refer it to an independent panel and said the whole process could take a "very, very long time" to settle.
Livingston declined to say what concerns the regulator had.
Meeting obligations
"This is a prudent valuation and a recovery plan which re-affirms BT's commitment to meeting its pension obligations," Livingston said.
"The operational improvements we are making in the business are generating sufficient cash flow to support the pension scheme whilst allowing us to pay dividends, invest in the business and reduce debt."
Independent pension consultant John Ralfe, who is not involved with BT, said the regulator should be happy with the size of the deficit and the assumptions used on longevity and the discount rate.
He said the time-frame was likely to be the main problem.
