BT sets 16-year plan to plug pension shortfall
However, BT’s chief executive stressed that the firm would not overpay for the latest deal to broadcast top-flight English football, as it goes head-to-head with Sky amid speculation it will try to out-muscle the satellite broadcaster for a larger portion of games.
BT yesterday set out a 16-year recovery plan to pay off the pension deficit, including £2bn over the next three years.
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Hide AdThe shortfall for the scheme, which has some 300,000 members including 40,000 current employees, has grown from £3.9bn in 2011. BT said it reflected the ultra-low interest environment. Patterson said: “These are slightly unusual times.”
The firm will pay £1.5bn, more than half of its existing cash and current investment balance of £2.8bn, towards the scheme by the end of April, followed by £250 million each over the next couple of years and further sums until 2030.
It will also have to find the money for a £12.5bn cash and shares deal to buy mobile phone operator EE should talks come to fruition in the next couple of weeks – with Patterson saying it was making “good progress”.
Analyst Paul Kavanagh questioned whether the payments towards the deficit would impact on BT’s sports ambitions – as the possibility of a multi-billion pound grab for the lion’s share of Premier League rights looms.
But Patterson said: “It won’t. The payments that we are making in to the scheme in the next three years are less than the payments we have made in the last three years.”
He said the 16-year recovery plan reflected “the strength and sustainability of our future cash flow generation”.
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Hide AdBT disclosed the deficit in a quarterly trading update which revealed adjusted pre-tax profits had risen by 13 per cent to £814m, ahead of City hopes. It also revealed plans to roll out “ultrafast” broadband delivering internet speeds six times faster than those currently available, starting from 2016-17, to reach most of the UK within a decade.
The trading update revealed that it added 119,000 broadband customers during the quarter, helping to boost revenues in its consumer division by 7 per cent to £1.08bn, with broadband and TV revenue up 15 per cent.
BT’s offer to broadband customers – as it vies with rivals such as Sky and TalkTalk – has been bolstered by the addition of free Premier League football.
It is currently in the middle of a £738m three-year deal to show 38 games a season. It has also bought Champions League rights for three years, starting from this autumn, for £897m. The auction for the next set of Premier League rights is under way.
Patterson added: “We are very clear on our strategy. Clearly there are risks. We are very conscious of those risks.
“We are also very clear on how sport, in particular the Premier League, can add value to our proposition for customers. We are very, very clear in what we are going for and what we want but we won’t overpay.”
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