Jeremy Warner: BT warns - and this time it's not the credit crunch

Outlook Nobody believed Ian Livingston, chief executive of BT, when he insisted a little while back that the dividend was safe, and as it now transpires, they were absolutely right. The Global Services unit, once billed as a high-growth, "new wave" business that would substitute for the contraction of legacy revenues from traditional voice telephony, is turning out to be more of an albatross than a support.

There was always a suspicion both the revenues and profits of this business, which sells network management to big corporates and governments (outsourcing, in effect), was more about funny accounting than hard cash, and the more we learn about it, the more likely this seems. BT appears to have been somewhat over-enthusiastic in the way it was booking sales and profits on some of its bigger long-term contracts. These are proving more costly than assumed. Some £340m is to be written off immediately, and Mr Livingston warns there is likely to be more to come. In any case, group cash flow targets are now certain to be missed, and with renewed worries about the costs of funding the pension scheme, it seems increasingly unlikely that the company will be able to hold to its dividend promise.

Mr Livingston has been chief executive for less than a year, and before that he was nothing to do with the Global Services division. So he cannot really be blamed for what's gone wrong there. If anyone is to be held accountable, it should be the previous chief executive, Ben Verwaayen, and he's long gone. Nonetheless, the present incumbent has been slow to get to grips with the problem. He may already be drinking at the last-chance saloon. If even solid old BT cannot keep paying the dividend, who can we rely on?