SHARES in BT surged to their highest level in five years yesterday after strong annual results crowned the telecom giant’s ground-breaking move into free televised English Premier League football.
Ian Livingston, the Scots-born chief executive of BT, also pleased the City with upbeat earnings and dividend guidance for the next two financial years, promising the current momentum was not in danger of faltering.
One analyst said: “There were some who looked askance at Thursday’s announcement, along the lines of anything given away free jeopardises earnings. But today’s numbers and the guidance show the strong confidence in management and that’s why the shares have reacted so positively.”
In a possibly choreographed move following the football gauntlet being thrown down to Sky, BT posted an 11 per cent rise in annual underlying profits to £2.7 billion.
The performance was even stronger in the final quarter of the financial year to end-March, with profits up 21 per cent to £833 million.
BT’s full-year dividend rises 14 per cent to 9.5p from 8.3p, courtesy of a final dividend of 6.5p. The group, unveiling improved trading across BT Global Services, BT Consumer, BT Business and BT Wholesale, also guided the market to dividends rising between 10 and 15 per cent in 2013-14 and 2014-15.
Livingston said: “We are doing what we said we would do. In an environment where it is easier to focus only on the short-term, we are investing in our future and delivering growth. People tend to underestimate what [BT] can do.”
The company, which is in a fight with Sky and Virgin to sell combined telephone, broadband and pay-TV packages, also guided to underlying earnings of £6bn-£6.1bn in this financial year and £6.2-£6.3bn in 2014-15. BT’s shares closed up 12.3 per cent at 309.5p.
Analysts said robust trading in BT’s core businesses, and its eye-catching drive into sport under Livingston, was a remarkable turnaround for the 167-year-old former state monopoly, which fell from City favour in 2008 after a series of profit warnings,
BT announced on Thursday that it was to offer 38 live broadcasts of Premier League matches to its broadband customers who pay £15 a month for its “super-fast” fibre-optic service.
Livingston said yesterday that the company hoped to sell other products on the back of the football offer to existing and new customers, and rejected critics who have suggested it is a marketing gimmick that will be charged for farther down the line.
“It’s not in our plans. You never say never, but our plan is to get more customers,” he said. Livingston added that he was “not calling the end of the pay TV model”, but there was an opportunity for competition.
“BT has hit a sweet spot,” said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers. “Prospects for the company look extremely attractive. In addition… the company has underlined its confidence in providing earnings visibility two years out.”