BT hikes dividend as TV sport gamble 'pay off'
Shares jumped 3% after the company announced 2.5 million customers have signed up for BT Sport television
Friday 31 January 2014
BT has hiked its annual profit forecast to £6.1 billion as its huge gamble on pay-TV looked to be paying off with strong customer numbers for both BT Sport and broadband.
Shares leapt 3 per cent after the telecom giant reported 2.5 million customers have signed up for BT Sport since its summer launch and BT also added 150,000 broadband customers in the last three months.
It was a landmark moment as BT’s revenues grew on a quarterly basis for the first time in four and a half years, rising 2 per cent to £4.6 billion.
“We’re seeing real evidence that the sport plan is working,” declared chief executive Gavin Patterson, referring to BT’s bold decision to offer free live Premier League games to broadband customers in a bid to stop them leaving.
BT’s claim to have won 60 per cent of all new broadband customers in the quarter, with the total market up 252,000, heaped pressure on rivals such as Virgin Media and TalkTalk. BSkyB, which yesterday reported 110,000 new broadband customers, and BT appear to be dominating the market.
“It would suggest other parts of the market are being squeezed,” agreed Patterson. TalkTalk shares dipped 0.5 per cent.
The BT boss said he was upgrading his estimate for full-year profits before exceptional items to £6.1 billion — the “upper end” of previous guidance.
Patterson admitted most customers who signed up to BT Sport are broadband customers who are taking the “free” option but refused to say if he might start charging.
“It’s free at the moment and I’m not in the business of giving anyone our plans going forward,” he said.
He pointed out BT Sport, which is fronted by Clare Balding, pictured, and Jake Humphrey, already generates revenue from some standalone customers and those who want to watch in high definition, as well as pubs and clubs.
BT, which has spent £2 billion on sports rights, has said it will impose a “small charge” for European Champions League football next year, after snatching the rights from Sky in a £900 million move.
"Looking at sport on its own would be wrong,” he said, explaining the business rationale. “Its halo effect on the broadband business and the [home phone] lines business is critical."
Customer losses from line rentals were down by 60 per cent. Subscribers to BT’s own TV platform, BT TV, rose 53,000 to 956,000 — still far below Sky’s 10.5 million.
Patterson is close to completing a deal with EE to start offering mobile to customers in a “quad play” alongside broadband, home phone and pay-TV.
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