BT warned it would miss earnings forecasts for its second quarter due to poor performance of its Global Services unit.

Global Services provides outsourced IT, telephone and network services to large companies and has been a strong driver of growth in recent years. The boss of the division, François Barrault, has resigned.

When it announces results on November 13, the company expects its BT Retail, BT Wholesale, Openreach and other activities to deliver results in line with or ahead of expectations. But it said the performance of the Global Services division had been poor.

"The results in BT Global Services are particularly disappointing," group chief executive officer Ian Livingston said in a statement.

"We acknowledge that the performance in this part of the group is unsatisfactory and are committed to taking decisive action to rectify the situation."

BT said the unit had suffered from slower than anticipated delivery of efficiency savings and the continued decline in higher margin UK business.

In a note, analysts at Cazenove said: "Given current stock market conditions, sentiment towards BT is likely to remain depressed for some time and hence we move to underperform.

"Investors are likely to be concerned over the risk of a rapidly deteriorating UK economy impacting BT's future operational performance. In addition, the pension scheme's funding position seems to have deteriorated sharply in recent months.

"Taken together, these issues present significant risks to BT's future cash flows and hence are likely to outweigh any debate regarding attractive headline valuation metrics." BT said that for the second quarter it expected to report group revenue ahead of expectations but earnings per share and earnings before interest, tax, depreciation and amortisation (EBITDA) would be slightly below expectations.

BT said the Global Services division was now expected to produce an earnings margin in the range of seven to eight per cent for the current financial year, which would knock group EBITDA into a small decline compared to last year.

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