BT Beats BSkyB in Quarterly Results

Rachel_Sandford

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Results for the third quarter of the year are in and it seems BT has unexpectedly beaten BSkyB!

The company's pay-TV service, BT vision, reported its strongest performance in two years. Combining Freeview channels, on-demand sports and films via broadband, and access to BBC iPlayer, they added 41,000 new viewers from July to September 2011. It was the first quarter in which they ever beat BSkyB for pay TV, with their rival pulling in only 26,000 viewers. BT Vision now has 638,000 customers, measly when compared to BSkyB's 10 million subscribers or Virgin Media's 3.76 million cable customers, but the fact that their third quarter results beat both major companies is telling.

On the broadband front, BT added 166,000 customers, which brings it up by almost 50% from the same time last year. Nearly half of the new customers signed up for BT Infinity, their superfast service, growing to a customer base of 300,000 for that service alone. This figure furthers BT's lead over BSkyB and Virgin Media as the biggest internet service provider in the UK, with 6 million customers. BSkyB and Virgin Media added 150,000 and 19,000 customers respectively to their broadband services.

Shareholders are said to be pleased with the better-than-expected results, which beat analysts' expectations on underlying earnings. The company's pre-tax profits rose to £552m. Shares in BT rose by 2.8% to 192.7p.

According to sources, the recovery of BT's global services business, which had problems in 2008 and 2009, helped boost results. Core earnings of the service grew by 15% year on year to £159m. In the third quarter of this year, it took orders worth £1.4bn. Apart from that, cutting its operating costs by 3% year on year has also helped.

It's not all good news, though. Telephony and broadband business BT Retail was dragged down by lower call volumes and line revenue, falling by 3% year on year to £1.85bn. Perhaps this is why Ian Livingston, BT chief executive greeted the third quarter results with caution, despite the overall success.

“We have increased cash flow, profits and underlying revenue in the quarter,” Livingston said. “Our performance in the quarter reinforces but does not change our outlook for the year... We expect to continue to offset the economic headwinds through improved customer service and processes, better efficiency, and investment in the future or the business. This strategy and our financial results allow us to invest when others are merely talking about it.

Despite the deterioration of the economic outlook, Livingston is optimistic about BT, saying expansion outside the UK is a key focus. The company plans to double business in the Latin American markets. They are also to accelerate the rollout of their superfast broadband fibre network in order to boost appeal in the multichannel market, which will let customers access TV and video on demand. The network is set to cover two-thirds of the UK by the end of 2014, which is one year ahead of schedule.
 
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