BT adds TV customers, impacted by increased sports costs

BT SportBT added TV customers in its latest quarter but its adjusted earnings fell due to higher sports rights, pension costs, and a decline in its Global Services unit.

Announcing its second quarter results for the three months ending September 30, BT said it added 7,000 TV customers, taking its television base to 1.8 million.

Despite starting to charge BT TV customers for BT Sport, the company said average viewing figures for BT Sport increased 8% year-on-year in the quarter.

This was driven by strong viewing of both Premier League football, which was up 2%, and UEFA Champions League, which was up 16%, with six British teams having qualified for the group stage for the first time since the 2007/08 season.

Within its consumer division, BT said that revenue was up 1% to £1.26 billion – driven by an increase in calls, lines, broadband, TV and sport revenue.

However, operating costs increased 2% to £1.02 billion due to BT’s investment in new UK customer service roles and additional sports rights costs from Premier League, Box Nation and the Ashes uplift in its Cricket Australia deal.

As a result, consumer division EBITDA was down 3% in the quarter to £245 million while depreciation and amortisation was up 4% and operating profit was down 5% for the three-month period.

Across the business as a whole, reported revenues were down 1% to £5,95 billion while adjusted EBITDA decreased 4% to £1.81 billion.

“Our first half results are in line with our expectations as encouraging results in our consumer facing lines of business, notably EE, helped offset ongoing challenges in our enterprise divisions, in particular Global Services,” said BT CEO Gavin Patterson.

“Given our underlying business performance, we are maintaining our outlook for the year.”

BT reported 10% revenue decline at its enterprise IT services and communications arm, Global Services, where there is a restructuring programme and efforts underway to reposition it as a “more focused digital business”.

Paolo Pescatore, vice president, multiplay and media, at analyst house CCS Insight, described BT’s TV net additions for the quarter as “extremely disappointing” –  particularly in in light of the new European football season “given the huge focus on sports and TV services”.

“Despite its strong assets, the company is struggling to cross sell more services into its existing subscriber base,” said Pescatore. “Marc Allera [CEO of BT-owned mobile operator EE] faces some tough decisions with the integration of the consumer units and the forthcoming Premier League rights auction.”

Tags: BT, BT Sport, Q3

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