BT prepares for battle with Sky

A day after announcing that it will be offering free live Premier League action to its broadband customers, the UK company said profits jumped 21 per cent to £833m in the quarter to March 31. Underlying revenues were flat against expectations of a 2.8 per cent fall.

The company’s shares jumped by eight per cent today as it also said it added 136,000 retail broadband customers in the period.

The launch of BT Sport is the company’s response to satellite broadcaster BSkyB’s efforts to win more internet customers by bundling broadband together with its TV and phone services.

BT also announced today that high-speed fibre web connections were now available to more than half of UK home and businesses, with roll-out accelerating in rural areas.

The company also raised its outlook for the current financial year, despite the level of investment going into its TV offering.

BT said it was looking to cut costs by around £200m a year and that it was expecting £400m in “specific restructuring costs” in the current financial year.

BT said this would involve some “people costs” as some employees would be given “the option to pursue other activities”, but no compulsory redundancies are expected.

Chief executive Ian Livingston said the figures showed BT was well-placed as it laid out plans to invest in the future.

Mr Livingston said: “In an environment where it is easier to focus only on the short term, we are investing in our future and delivering growth in profits and dividends.

“We have a lot more to do but we are now a lot better positioned to do it.”

He hit back at Sky’s description of BT’s free TV offering as a “marketing gimmick” amid suggestions that it would upset sports rights holders by using sports coverage as a loss leader for other services.

Mr Livingston said: “We talk about customers. They talk about sports rights holders.

“It would be strange if they weren’t pleased about the chance for more people to watch football and to watch the rugby.”