Joseph O'Halloran | 25-07-2013
Even though it is still to launch, BT is already getting a return on the significant investment the UK incumbent telco has made in the BT Sport division.
According to it latest financial results, for the first quarter of the year ended 30 June, BT generated revenues of £4.5 billion, down 1% year-on-year, driving an adjusted net profit before tax of £595 million.
Yet underneath this, it was clear just as to how important the TV division has become to BT, spending around £40 million in pre-launch costs for BT Sport. Commenting on the results, BT CEO Ian Livingston made particular note of the forthcoming BT Sport service which he disclosed had notched up 500,000 orders already. He said: “BT continues to make good progress, delivering another quarter of solid growth in underlying profit before tax. This is despite the impact of regulation and the significant investments we are making for the future. It is early days but we are very pleased with the strong start in BT Sport.”
BT also revealed that most of the new BT Sport subs were existing customers who had re-contracted their broadband service to receive the new service free of charge. It expects the proportion of new customers to increase after the official BT Sport launch on 1 August.
Despite the optimism for BT Sport, the BT Retail division, in which TV services sit, showed a 1% fall in consumer revenues. A 5% decline in calls and lines revenue was partially offset by 9% growth in broadband and TV revenue. In the quarter, BT made 23,000 net additions in its overall IPTV offering taking the customer base to 833,000.
Looking at the near-term future, BT asserted that the first quarter results positioned it well for the full year, for which its outlook is unchanged. It warned investors that EBITDA in the first half of the year will be impacted by its upfront investment in BT Sport and expects that this will lead to a second quarter hit of around £100 million including programme content costs which it will start to recognise.