BT slashes pension fund contribution to £2bn

Cheaper plan to reduce £7bn pension-fund black hole

BT geared up for next week’s Premier League broadcasting rights auction by announcing better-than-expected profits, a new, cheaper plan to reduce its £7bn pension-fund black hole, and the launch of ultrafast broadband services.

“We are in a good place with football,” its chief executive, Gavin Patterson, said yesterday, referrring to the company’s forthcoming takeover of Champions League match broadcasts, alongside its existing Premier League packages. “We are not to going to chase rights at any price.”

Analysts predict that the auction for the next three seasons of Premier League match rights could see Sky, BT and new bidders push up the cost from £3bn to £4bn. Continuing growth in the numbers of subscribers to BT Broadband and BT Sport helped the firm’s profits to rise by 13 per cent to £814m in its third quarter. Revenues were down 1 per cent at £4.5bn but remained flat for the first nine months of the year, which was in line with forecasts.

Mr Patterson had no update on BT’s £12.5bn takeover of mobile giant EE. He said: “There’s nothing to be concerned about. We are making very good progress on due diligence and should be able to say more soon.”

But he added that he was pleased with the early settlement with BT’s pension-fund trustees. Even though the deficit has ballooned from £3.9bn to £7bn over the past three years, because of low gilt yields, the amount BT will pay into the fund over the next three years has come down from £2.7bn to £2bn. Mr Patterson said: “This is a good deal for the scheme’s 300,000 members and the company. It reflects our financial strength and strong cashflow.”

BT also said the launch of ultrafast broadband would bring speeds of up to 500 megabytes per second to most of the UK within a decade. Trials will start this summer in Huntingdon, Cambridgeshire, and in Gosforth, Newcastle. The new technology – called G.fast – boosts signals in existing broadband networks and can be used on the final copper link from BT cabinets to homes and businesses.

“The UK is ahead of its major European neighbours when it comes to broadband and we need to stay ahead as customer demands evolve,” said Mr Patterson. “G.fast will allow us to do that by building on the investment we have made in fibre to date. That upgrade will depend, however, on there continuing to be a stable regulatory environment that supports investment.”

BT shares fell 11.2p, or 2.61 per cent, to 417.9p last night.