BT looks to jettison troublesome Italian business – report

It would appear that dodgy accounting is the final straw for BT, as the group looks to shake itself free from its Italian business.

According to sources close to the Telegraph, a senior delegation from BT has spent the last few days in Milan to discuss the future of the business unit, which has been the centre of attention over the last couple of months due to ‘creative’ accounting strategies. As the team look to restructure the flagging Global Services unit, it would appear the consensus is to get rid of the Italian trouble maker and focus attentions elsewhere.

It is not thought the sale will be a lucrative move for the BT Group, as the Italian business unit is a loss-maker currently, but it does look like a case of out-of-sight out-of-mind. The losses will be accepted by the team, as one would assume the mess is so unsightly it would simply be too much of a headache to sort it out.

If BT is conceding the Italian Job is too much of an issue to clean-up itself, there will have to be some creative thinking to package the unit up so it looks attractive to a prospective buyer. How much of an issue this point will be remains to be seen, though a win for BT could simply be putting considerable space between itself and the accounting scandal, irrelevant of how much (or little) cash heads its direction during the transaction.

The move is also another hint at the direction of BT new strategy, which relies on cloud computing and a more streamlined infrastructure model. In other words, BT appear to believe owning infrastructure in the UK will be enough to serve international customers, therefore the BT Italia infrastructure is redundant.

What isn’t clear is where the BT data centres will be located. If selling BT Italia’s telecoms network also includes the data centre assets, it could be a very short-sighted move.

As the UK lumbers towards Brexit, the data residency issue is likely to become a talking point once again. BT customers in countries which has more of a sensitivity towards data residency are unlikely to be thrilled about the prospect of data leaving the European Union and entering UK jurisdiction.

The process is still at a very early stage for the moment, though as details become clearer, we’ll be able to see if this is an own goal for the BT cloud ambitions.