BT in freefall
Firm that spent £2bn on football rights sees customers vanish as shares hit a 5-year low
BT was plunged into fresh turmoil last night as shares in the company sank to a five-year low.
The firm’s value has now halved to £25billion since 2015, as it grapples with customers deserting its pay TV service as well as a £14billion pensions black hole.
BT has been criticised by families complaining about slow broadband speeds and unreliable connections, as well as for its vast spending on football rights.
Bosses yesterday revealed 5,000 customers dropped their TV subscriptions in the final three months of last year when sales and profits slumped.
The company also faces a battle with UK regulators over broadband pricing, and is recovering from a £500million accounting scandal in Italy.
The only part of the business that wasn’t flat or declining was its mobile phone arm, EE.
The grim news saw shares tumble to their lowest point since 2013, although they recovered slightly before the markets closed. The shares which were trading at nearly 500p each just over two years ago, were worth 250.35p each.
The fall piled pressure on boss Gavin Patterson, 50, with rumours swirling for months that he could be replaced if the company’s fortunes do not improve. But the under-fire chief executive brushed off concerns about the loss of TV subscribers yesterday, insisting it was a fraction of a total 1.8million customers.
He said the focus was now on making more money out of the customers it has, rather than trying to win new ones.
BT has been criticised in the past for its spending on TV football rights – it paid £ 1.2billion on securing Champions League rights until 2021, and £960million for Premier League rights up to 2019 – rather than investing in other areas.
Mr Patterson said yesterday: ‘We have changed We we are are focusing not the going strategy on after value. volume, on TV.
‘We’re confident in the steps we are taking to improve the performance of BT.’
The firm laid some of the blame for its sales woes at the door of its global division, which is being overhauled after the Italian scandal.
The complex accounting fraud, news of which emerged in January, caused the firm to write down £571million.
The business provides computer services to big multinational companies but sales tumbled to strapped decade December. after for in the cash committing BT three could over the months also next to be a major expansion of cuttingedge broadband cables. It is due to hear from regulator Ofcom about how much it can charge internet providers to use its cables – a big source of income – within weeks. Meanwhile, bosses are also locked in talks with union chiefs about possible cuts to the retirement pots of staff. Reaching a deal will be a vital step towards reining in its
‘Things don’t look pretty’
£14billion pension deficit. Yesterday analysts said BT had become a ‘Marmite stock’ – which investors either love or hate – with 2018 likely to prove a pivotal year.
Guy Peddy, an analyst at Macquarie, said: ‘There was nothing to really inspire investors in BT’s update today.
‘The shares are struggling because it has still got three or four issues to deal with before it can give people more confidence.
‘The question now is whether management can win back that confidence – and if they can’t then, by definition, there would have to be a change.’
Laith Khalif, of Hargreaves Lansdown, added: ‘Things at BT do not look very pretty at the moment and it is not winning any popularity contests.’
Russ Bell, an investment director at AJ Bell, said: ‘BT is currently the ultimate Marmite stock in the UK.
‘A settlement on the pension deficit would be a huge plus, as would reassurance that the company is not going to overpay for football rights.’