BT to tackle £7bn pension deficit

BT has revealed that its pension deficit has swollen to £7bn as it agreed a 16-year recovery plan that will include £2bn in payments over the next three years.

The deficit for the scheme, which has 300,000 members – around 40,000 of them current employees – has grown from £3.9bn in 2011. BT said it reflected the low interest environment.

The disclosure came as BT also unveiled plans to roll out “ultrafast” broadband delivering internet speeds six times faster than those currently available, starting from the 2016/17 period.

Its “G.fast” technology, which will be tested at pilot locations this summer, will help deliver a service of up to 500Mbps to most of the UK within a decade, BT said. Currently BT’s “superfast” fibre network delivers speeds of up to 80Mbps.

In a trading update, the group also said pre-tax profits for the third quarter to the end of December were £814m, up 13% from the same period a year before and ahead of expectations.

BT said it added 119,000 broadband customers during the period. Its offering has been bolstered by the offer of free Premier League football, as it vies for business against rivals such as Sky and TalkTalk.

Analyst Paul Kavanagh questioned whether the pensions charge would impact on the telecoms giant’s sports ambitions, as the round of bidding for the next set of Premier League TV rights gets under way.

Meanwhile the group said it was making “good progress” in its plan to buy the EE mobile phone network for £12.5bn.