Football fans tuning in to watch Champions League and demand for superfast broadband boosts BT profits
Britain’s biggest telecom firm BT Group said it was on track to meet its full-year expectations thanks to strong demand for its superfast broadband and a flurry of new customers signing up to see Champions League football.
BT’s exclusive rights to show Europe’s premier football competition has attracted new customers, with 60,000 buying its pay-TV services. Meanwhile, 217,000 new customers took its fibre broadband in the three months to June.
The group, which is in the process of taking over Britain’s biggest mobile phone company EE, said its first quarter results were in line with expectations, with pre-tax profit 9 per cent higher at £694million and revenues up 1 per cent to £1.4billion in the three months to June.
Football time: BT’s exclusive rights to show the Champions League attracted new customers (Pictured: BT Sport presenters and pundits, including Gary Lineker, Michael Owen, Steven Gerrard, and Ian Wright)
But, despite this, BT shares fell this morning as its Global Services division, which handles the IT needs of multinational corporations and governments, saw a slowdown, with revenues and profit falling by 4 per cent and 11 per cent respectively in the quarter.
In late morning trade, BT shares on the FTSE 100 index were down 2 per cent, or 9.7p at 463.7p.
BT chief executive Gavin Patterson said the result at Global Services tended to fluctuate from quarter to quarter and added that the division had a strong order book.
Analysts at the Share Centre said today’s figures were good and showed ‘great potential’ for growth over the next few years given BT's new mobile and superfast broadband services.
‘Subsequently, we recommend BT as a “buy” as it continues to transform into the dominant telecoms provider in the UK, develops full value from the EE takeover and uses its strong cash flows to raise dividends well above inflation,’ they said.
BT is awaiting the outcome of a Competition and Markets Authority investigation into its takeover of mobile phone operator EE - a deal that could create the largest mobile phones operator in the country.
The group has also been warned by the telecoms regulator that it could be broken up in order to improve competition in the broadband market.
Ofcom said it could force BT to sell off its Openreach service, through which the communications giant provides access to its broadband and home phone network on ‘equal terms’ to its competitors.
But Gavin Patterson has responded by suggesting that the company could be locked in a decade of court battles if it was threatened with being broken up.
Will Hedden, dealer at London Capital Group, said BT had already seen business growing thanks to the integration with EE, but warned of the risks coming from a potential break-up from Openreach.
‘The benefits from BT's EE integration in the medium term may be hampered if rivals successfully argue that the network operator part of the group, Openreach, should be spun off into a separate entity,’ he said.
Last week BT announced a raft of price increases on services including landlines, broadband and phone calls which will come into effect from September.
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