BT shares hit after third quarter results falter
The numbers come ahead of a Premier League TV rights auction.
Shares in BT took a drubbing on Friday after the telecoms giant revealed falling third-quarter revenues and earnings as it lost 5,000 pay TV customers.
The group saw adjusted earnings drop 2% to £1.8 billion in its third quarter to December 31, while sales fell 3% to £5.97 billion.
BT put the declines down to increased investment in mobile devices and “customer experience”, along with higher business rates charged on its network assets as well as pension costs.
Shares were down nearly 5% to 244p as investors digested an update which showed 5,000 pay TV customers deserted the firm in the period.
AJ Bell investment director Russ Mould said: “Concerningly for a company which has pinned much of its hope for future growth on a sports rights led TV strategy, the company lost 5,000 TV customers in the last three months of 2017.”
The numbers come ahead of a Premier League TV rights auction, which has seen intense bidding wars between BT and rival Sky in the past.
The duo announced a deal that will allow them to sell their channels on each others’ platforms in December, which lessons the likelihood of a similar scenario.
But Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “The eye-watering amounts of money paid for players reflects in part the gargantuan sums that BT and Sky plough into securing televised games for their sports channels.
“The fear is that Amazon and Facebook may throw their hats in the ring this time around, inflating the cost of rights beyond the £5 billion Sky and BT forked out last time.
“A bigger spend wouldn’t be good for shareholders, or customers for that matter, though the footballers will be chuckling all the way to the bank.”
BT also disclosed its latest pension deficit, which stood at £7.9 billion at the end of December, up from £7.7 billion at the end of September.
The firm is reportedly planning to close its defined benefit pension scheme to future accruals in a bid to plug a gaping funding hole.
The firm said on Friday: “We continue to review the future pension benefits under our main defined benefit and defined contribution schemes in the UK, with the objective of providing fair, flexible and affordable pensions.
“We have completed a consultation with our affected employees and are considering their feedback.”
On a bottom-line basis, pre-tax profits rose 25% to £660 million compared to the same quarter last year, when the firm took a hefty hit from an accounting scandal at its Italian division.
BT said it spent another £9 million in investigation costs in the first half on the scandal, which resulted in a £530 million write-down and a major fall in its share price, knocking £8 billion from its market value.
Chief executive Gavin Patterson said: “Our third-quarter financial results are broadly in line with our expectations and we remain confident in our outlook for the full year.
“We continue to improve our customer experience metrics across the group, with our sixth successive quarter of improved customer perception.
“We continue to work closely with the UK Government, Ofcom and our customers to expand the deployment of fibre and Openreach recently announced plans to accelerate our FTTP deployment to three million premises by the end of 2020.”
On Thursday Openreach, which is owned by BT but independently run, announced a drive that will see around three million homes and businesses linked up to ultrafast fibre broadband by 2020.