BT profits slide as Champions League TV rights take their toll

Investment on broadcasting rights for the Premier League, Champions League and other big ticket events took its toll on BT, leading to a drop in revenue and profits in the second quarter of its financial year.

In the three months to the end of September, the FTSE 100-listed group saw both revenue and profits before tax decline 1% year-on-year to £5.95bn (€6.78bn) and £666m respectively.

However, on an adjusted basis, profits before tax were 10% lower than in the corresponding period last year at £789m, while adjusted earnings before interests, tax, depreciation and amortisation fell 4% to £1.81bn.

BT attributed the decline to increased investments on sport broadcasting rights and on its customer service division.

In March, the broadcaster sealed a £1.2bn deal to retain exclusive rights to the Champions League and the Europa League until 2021 after seeing off competition from Sky.

In July it secured exclusive rights to broadcast all the matches of the European Rugby Champions Cup and the European Rugby Challenge Cup.

The EE mobile unit, meanwhile, performed strongly during the three-month period, offsetting the ongoing weakness in the company's global services arm, which saw earnings tumble by 39% to £81m.

"Our first-half results are in line with our expectations as encouraging results in our consumer-facing lines of business, notably EE, helped offset ongoing challenges in our enterprise divisions, in particular global services," said chief executive Gavin Patterson.

"Given our underlying business performance, we are maintaining our outlook for the year."

However, the company reported a drastic drop in the consumer division, with only 7,000 TV customers added in the quarter, compared with 63,000 in the corresponding period last year.

Meanwhile, the recent accounting scandal in Italy, which resulted in a £530m write down and knocked £8bn off the company's market value, cost the company an extra £6m in investigation costs.

BT, which is axing 4,000 jobs in its global services division, maintained its interim dividend at 4.85p but added it would adjust it from next year, so that the interim payment would be fixed at 30% of the previous year's total payment.