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By Mark Graham, 10 May 2001 17:35

NEWS Releasing its preliminary end-of-year results to the 31 March, BT said its German mobile arm contributed to the company falling into the red for the first time, with pre-tax losses of £1.03bn, down from £2.94bn last year. BT's chairman. Sir Christopher Bland, said the non-cash charge against the goodwill was "in the light of changed expectations". According to David Brown, director of telecoms consultancy Schema, if Viag Interkom had been managed properly the poor performance would never have resulted. "I tend to get extremely worried about partnerships and the tension between joint owners, as investments and that sort of thing seem to get delayed. I believe something of that sort happened here," he said. He said goodwill, which puts a figure to assets that cannot be quantified, such as customer base, is an accountant's nightmare and BT has effectively bitten itself in the tail. "The nature of the business had changed as it was originally going to be fixed and mobile," Brown said. A BT spokesman said it was purchased at the height of the boom in August last year and admitted right now it "doesn't seem as good a buy as it did last year". However, he added BT is committed to the German subsidiary as "it should prove a good buy in the long-term". Brown agreed, noting that now BT has finally taken control it might be able to turn its finances around. The company results came with the expected confirmation of a £5.9bn rescue rights issue to help reduce its £27.9bn debt. The company maintains it's still on target to reduce this by £10bn by the year's end. Following the news, BT shares fell 5.7 per cent in early morning trading, down to 536p.