BT is being sued by consultancy Magenta netLogic for £88m for alleged breach of contract.

The firm claims it signed a contract with BT to investigate potential savings at BT Global Services - the company would then be paid a percentage of any savings the telco made by acting on Magenta's advice.

The consultancy claims that BT never acted on its cost-cutting advice for Germany and the US. Nor has the telco paid it for local lines rented in Germany and the US.

BT said: "BT does not accept it is responsible for breach of contract. In fact, BT considers that Global Capacity failed in its duty properly to perform those services it was obliged to under the contract. Their alleged cost-cutting plan did not bear up to scrutiny and the results identified were demonstrated very quickly to be hopelessly flawed.

"BT will vigorously defend Global Capacity's claim for damages and wholly disputes the invoices they have raised for US$11.25m." ®

Related stories

• Nortel and BT ink enterprise deal (18 May 2009)
• BT does Italian Job on London traffic lights (6 April 2009)
• Exclusive Rogue international ‘M&A advisors’ target Brit ISP customers (12 March 2009)
• BT freezes wages for 100,000 (12 March 2009)
• Phorm CEO clashes with Berners-Lee at Parliament (11 March 2009)
• BT job cuts start to bite ahead of March deadline (11 March 2009)
• BT reprograms biz customers as hotspots (27 February 2009)
• BT profits crash (12 February 2009)
• BT shares tumble on £340m Global Services bill (22 January 2009)