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By Ian Walker

LONDON--BT Group PLC (BT.A.LN) said a bigger-than-expected 530 million pound ($661 million) write-down related to an accounting scandal at its Italian business will weigh down on earnings for the next two years.

BT originally expected to take a charge of GBP145 million.

The charge reduced adjusted revenue and adjusted earnings before interest, taxes, depreciation and amortization in the three months to end-December by GBP120 million, BT said on Tuesday. For the year to end-March, adjusted revenue is set to drop by GBP200 million, and adjusted revenue would be GBP175 million lower, the company said. BT added that it expects a similar impact in fiscal 2018.

"The improper behavior in our Italian business is an extremely serious matter, and we have taken immediate steps to strengthen the financial processes and controls in that business," BT said.

As part of this the company has suspended a number of BT Italy's senior management team who have now left the business. BT has also appointed a new chief executive of BT Italy who will take charge on Feb. 1.

In its trading statement, the U.K.'s former monopoly operator said it still expects to increase its yearly dividend by 10%, while fiscal third-quarter earnings were in line with market expectations after stripping out the impact of the write-down.

-Write to Ian Walker at ian.walker@wsj.com; @IanWalk40289749

(END) Dow Jones Newswires

January 24, 2017 02:51 ET (07:51 GMT)

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