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SBD Global/November 1, 2013/Media

BT Signs Up 2 Million Customers, Scores Early Success In Battle With BSkyB

BT has signed up more than 2 million customers for its new sports channels, "marking early success in its battle with BSkyB," according to Daniel Thomas of the FINANCIAL TIMES. However, the costly launch of BT Sport and the acquisition of sports rights for the channels "weighed on earnings at BT, which is embroiled in a big gamble to win high spending TV and broadband customers against rival BSkyB." BT’s share price, which has risen 60% this year as "investors have embraced the more aggressive growth strategy," rose 2.4% to 378.2p on Thursday afternoon. BT said that the clear majority of the 2 million signed to its sports platform "were existing customers who would get the channels for free." This number doubled from August, and compares to 10.5 million paying BSkyB subscribers. An additional 70,000 new customers boosted BT’s overall pay TV platform to about 900,000 subscribers. As "importantly for BT," which is using TV to attract customers to its wider package of high speed fibre and calls, there were 156,000 new retail broadband customers in the quarter. This represented "more than nine in ten of the overall broadband market net new customers in the period" (FT, 10/31).

CONSUMER SALES UP: In London, Juliette Garside reported revenues from consumer sales are up 4% in the September quarter, the best performance in 10 years, and BT's TV service has added 70,000 subscribers, more than in any quarter since '08. The loss of customers with a BT telephone line -- "a key measure of defections from the company" -- fell to 65,000 for the quarter, the best performance in five years. Jefferies bank analyst Jerry Dellis fears Sky "had successfully countered the impact of BT Sport by giving away broadband free to TV subscribers had been overblown." Dellis: "Robust broadband net adds from BSkyB … had raised some concern that BT's heavy investment in TV might be having rather limited initial impact at stemming the loss of retail lines within the BT base. In fact BT Retail KPIs are quite encouraging" (GUARDIAN, 10/31).

SATURDAY HELP: In N.Y., Simon Zekaria reported BSkyB -- which has rights to more than three times the number of live matches -- "shrugged off the challenge earlier this month," saying its Premier League TV audience is up more than 20% compared with last year, "helped by a key Saturday-night live game slot." Viewing of its sports channels rose near 15% year-on-year. Still, BT said BT Sport is now in 4 million British homes, with "more than half of customers taking the channels direct from BT and others having the service via a wholesale deal with Virgin." The launch "sparked broadband sign-ups, stemmed losses of fixed-line customers and drove up consumer revenue by 4% -- its best performance in 10 years" (WALL STREET JOURNAL, 10/31). Hargreaves Lansdown Head Of Equities Richard Hunter said, "The take-up of BT Sport from existing customers, as well as its contract with Virgin Media, puts the company in front of a whole raft of consumers. This has, of course, come at a cost, and investment in the new foray into sport has provided a drag on overall earnings. On balance, though, the company's prospects continue to whet the appetite of growth investors" (INDEPENDENT, 10/31).
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