EE chief Marc Allera to lead newly-reorganised consumer division.

BT’s fiscal first quarter pretax proft fell 42% on last year after it paid £225 million to settle claims from shareholders Deutsche Telekom and Orange.

Deutsche Telekom and Orange own 12% and 1.33% of BT respectively, having taken stakes when they sold mobile operator EE to it in 2015. Orange’s stake originally stood at 4%, but it sold a chunk of it in June.

Under the agreement, Deutsche Telekom and Orange were given warranty protection in the event that BT’s share price took a hit. That is exactly what happened in January, when BT issued revenue and profit warnings on weakness at Global Services, and when the full extent of the Italian accounting scandal was disclosed.

The settlement meant BT’s pretax profit fell to £418 million from £717 million a year earlier.

The topline was a bit healthier, with revenue excluding transit edging up 1% year-on-year to £5.84 billion (€6.52 billion) in the three months to 30 June, driven by its Consumer and EE divisions. Consumer’s revenue grew 7% to £1.26 billion, while EE’s grew 4% to £1.29 billion.

BT’s mobile customer base fell to 29.8 million from 30.3 million a year ago, as postpaid net additions of 210,000 were offset by prepaid losses totalling 385,000. Its fixed broadband base increased to 20.4 million from 20 million, driven by the addition of 170,000 retail fibre-to-the-cabinet (FTTC) net adds.

BT’s TV customer base increased to 1.8 million from 1.6 million a year ago; however, net additions slowed to just 8,000, compared to 59,000 a year ago, reflecting intense competition, and BT’s decision in January to start charging for its BT Sport channels.

Consumer and EE have been the bright spots on BT’s balance sheet for several quarters now, so it is perhaps no surprise that the telco on Friday announced it will merge the two divisions in order to offer consumers bundles of fixed and mobile services under the BT and EE brands, as well as its low-cost home broadband brand, Plusnet.

The merged division will be led by current EE chief executive Marc Allera from 1 September.

"Marc has led the successful integration and delivered the improved customer experience and strong financial performance of EE. He will lead our continued integration and convergence in consumer telecommunications," said BT CEO Gavin Patterson.

John Petter, who currently heads up Consumer, will leave BT after 13 years at the company.

"I’d like to record my sincere thanks to John for all he has done for BT over a number of years. Most recently as CEO of BT Consumer where he has overseen our rapid expansion in the consumer marketplace. I wish him all the very best for the future," Patterson said.

Meanwhile, it was another tough quarter for BT’s Business and Public Sector division, which saw revenue fall to £1.13 billion from £1.17 billion, despite rolling 12-month order intake increasing 21% year-on-year to £3.9 billion.

Global Services is also still struggling, with the slowdown in international corporate spending resulting in revenue falling 6% on last year to £1.24 billion.

Openreach revenue grew slightly to £1.27 billion from £1.25 billion, driven by continued demand for fibre-based broadband. The infrastructure provider has passed 550,000 homes with either fibre-to-the-premises (FTTP) or G.Fast, and more than 100,000 premises are up and running on these technologies.

Wholesale and Ventures – which provides network product and services to CSPs – generated revenue of £492 million, down from £518 million a year earlier, on softer demand for mobile Ethernet access services (MEAS), data and broadband, and voice services.

Finally, BT also confirmed the appointment of Cathryn Ross as its new director of regulatory affairs. She currently serves as CEO of water sector regulator Ofwat, and is expected to join BT next January.

Ranulph Scarbrough, director of strategic development at Openreach, is one of many high-level speakers at Connected Europe, which takes place in Lisbon on 11-12 October. Click here to find out more.