BT wins early round against BSkyB

In fact, of the 168,000 net new broadband customers in the UK over the three months, BT accounted for 156,000, or 93 per cent of them, taking its broadband customer base to around 7m. Given Sky reckons it added 111,000 during the same period, it seems likely a different rival is losing market share. The numbers, which appear to vindicate BT's aggressive new growth strategy, proved a hit with investors and the share price has leapt to its highest in almost 12 years. However, the hefty costs involved with launching BT Sport, especially the inflated price of TV rights for Premier League football, weighed on earnings. Underlying cash profits fell 4 per cent in the second quarter to £1.4bn, still ahead of consensus forecasts, and reported pre-tax earnings, which include restructuring and pension costs, fell 10 per cent to £499m. BT’s pension deficit rose to £6.7bn before tax under accounting rules at September 30, from £5.2bn in June. Still, after adjusting for a number of specific items, pre-tax profit actually rose 2 per cent year on year to £609m, also ahead of estimates.

And be prepared for another slug of costs if, as is widely expected, BT makes a bid later this year for partial rights to broadcast Champions League football. But it could be money well spent, making BT Sport a must-have for pubs and other venues, and would reaffirm BT's long-term ambition to become a real triple-play threat. New chief executive officer Gavin Patterson, delivering his first set of results since taking over from Ian Livingston in September, said little regarding BT’s strategy for mobile. But a partnership deal announced in October with EE, the UK’s largest mobile operator, allows BT to use the EE network and suggests mobile could be another future source of growth.

After tweaking its estimates slightly higher, broker JPMorgan Cazenove now expects full-year adjusted pre-tax profit of £2.14bn and adjusted EPS of 26.9p (from £2.32bn and 26.3p in 2013).