A UK High Court ruling this week will reveal the cost of covering incumbent BT’s pension scheme in the event it went bankrupt, reported the Mail on Sunday.
According to the report, a case brought against the government by BT’s pension fund trustees will…
A UK High Court ruling this week will reveal the cost of covering incumbent BT’s pension scheme in the event it went bankrupt, reported the Mail on Sunday.
According to the report, a case brought against the government by BT’s pension fund trustees will come to a head this week, determining how much the former state-owned monopoly is worth.
The guarantee was agreed when BT was privatized in 1984 to protect employees and pensioners in case the group went bust.
The government argues that this guarantee applies only to those who had worked at BT before the privatization, but trustees argue it also covers those employed after this date.
The report suggests that the government’s liabilities would be £23bn if the trustees win their case. The government’s liabilities would be £7bn if the High Court rules in favour of the government.
Announcing quarterly results, BT CEO Ian Livingston said the group’s pension scheme deficit had fallen to around £6.6bn at March 21, 2010, from £9bn at the end of 2008.
At March 31 this year, the market value of the BT Pension Scheme assets was £35.3bn and £33.9bn at June 30, 2010.
A spokesman for BT was unable to confirm a date for the legal action because the case was brought by the trustees, who did not return requests for comment.
In other news, BT has announced it will not lose its central government contracts as part of the country’s wider public services cost-cutting programme, signing an an MoU with the government to this effect.
“With today’s agreement, we will continue to be one of its largest suppliers of networked IT services,” said Jeff Kelly, CEO of BT Global Services.
“Many of BT’s existing contracts have already delivered financial savings and operational efficiencies, demonstrating the benefits of public-private partnerships.”
UK chancellor George Osborne will announce a comprehensive spending review on Wednesday as part of plans to cut Britain’s budget deficit to almost nothing in five years.
BT recorded revenue of £20,859m in the year ended March 31, 2010, representing a 2% fall when compared to the £21,390m posted in the corresponding period last year. Reported EBITDA for the year to the end of March 2010 was £5,162m, which is an increase of 62% to the £3.191bn reported in its 2009 full-year results.
