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Business News

BT switches on more TV viewers and broadband users than Sky

Profits climb 15 per cent on brisk broadband sales as telecoms giant beats analysts' expectations

BT outpaced its rivals in the broadband internet market as it picked up 166,000 new customers in the third quarter, helping the company beat profit expectations. Wins for the group's television service, BT Vision, also outpaced Sky for the first time ever.

The telecoms giant increased its net new broadband users by 46 per cent in the three months to 30 September, compated with a year earlier. Its total broadband customers rise to six million. Sky added 150,000 subscribers in the same period, but only 19,100 joined Virgin.

BT managed beat analysts' expectations across the board. Its third-quarter pre-tax profit jumped by 15 per cent to £570m year on year, as underlying revenues rose 0.4 per cent to £4.8bn. Its shares closed up 2.8 per cent last night at 192.7p after the chief executive, Ian Livingston, praised what he called "another quarter of progress".

Morten Singleton, an analyst at Investec, said: "BT is proving to be the resilient port in the storm."

Mr Livingston, who has guided BT through a turbulent period for two years, preferred to remain cautious, saying: "This was a pretty reasonable set of numbers. With a double digit growth in earnings we are pretty happy."

BT Vision grew faster than Sky TV, although from a significantly lower customer base. The former, which launched four years ago, achieved a two-year high of 41,000 net additions. Over the same period, Sky TV added 26,000 new users.

BT also said it outpaced Virgin Media, although with new customers being brought on to its TiVo service, Virgin disputes the claim.

A spokesman for BT Vision admitted it was growing from a significantly smaller base than its rivals, of 638,000. Virgin has more than 3.7 million subscribers and Sky more than 10 million.

BT's retail division saw its earnings before interest, taxation, depreciation and amortisation increase from £414m in the second quarter of 2010 to £445m a year later. Despite a strong three months across the group, BT chose not to raise its expectations for the full-year results.

"This strengthens expectations but doesn't change them," Mr Livingston said. "There are some headwinds, particularly in the small and medium-sized enterprises market. They are spending less on IT, and we are seeing some effects there."

The company also revealed yesterday that it was planning to move into music streaming next year. Mr Livingston said: "We'd like to offer music services and we are talking to the industry." It follows a similar partnership between Virgin and Spotify, and the short-lived Sky Songs, which closed last year owing to lack of demand.

BT's global services division, which forced the company to post a full-year loss of £1.3bn in May 2009, continued to recover. Its revenues and profits grew, and it hopes to achieve further growth in Latin America. Global services has secured a series of heavy-hitting clients including B&Q's parent company Kingfisher, the Co-op and Best Buy Europe. "We're heading in the right direction," Mr Livingston added. "The team is doing a good job, but there is more to do."

Earlier this week, BT said it had accelerated its roll-out of fibre-optic broadand to reach two-thirds of the UK by 2014 – a year earlier than planned.

Best buy deal coup for BT

Of all the contracts BT's global services division won in the third quarter, it was particularly proud of Best Buy Europe. Insiders said BT snatched the job away from rival TalkTalk Business – a slap in the face for the latter, which demerged from Best Buy Europe last year.

But Best Buy dampened the triumphalism, saying BT had provided its corporate and store infrastructure for years, and the latest win was for ancillary services. TalkTalk will still provide services including its voice networks.

Nick Clark