BT's before-tax profit fell 81% to £113 million ($160.3 million) last quarter, and the company has warned it faces heavy one-off charges this quarter.
The charges could result from BT's attempts to revive its ailing Global Services division, BT said. These efforts already led to a £336 million charge in the last quarter.
The global services division posted an operating loss of £501 million and severely impacted the group result, said CEO Ian Livingston.
"We need to build a solid base in global services from which we can deliver positive cash flows," Livingston said. "We have already announced changes in management and are making significant financial and operational changes to the business."
He said the company's three other divisions had beat expectations with "their best year-on-year profit growth for five years."
If BT can succeed in its efforts to turn around the division, it expects to have a free cash flow of over £1 billion next financial year. Group-wide revenue grew 5% to £5.4 billion over the quarter.
BT stock fell 7.8% to 97p following the announcement.
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