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Optimism of how successful BT has been this year might have taken a dent following last week’s figures from BSkyB. BT’s biggest rival was able to post an improvement in its first nine months as sales had increased by 6.6%. More importantly, the satellite firm saw 74,000 new subscribers in the third-quarter causing the markets to ask how well BT’s strategy was working.
Having plagiarised the BSkyB playbook of getting the sports and the clients will follow, investors are holding their breath ahead of tomorrow’s figures when they will see how successful this has been. This strategy was always going to see costs being front loaded as BT has had to acquire the rights to a number of major sporting events, and also embarked on sponsorship of some prominent British teams. Having secured these sporting events BT then offered them for free to subscribers of its broadband packages.
With the emergence of companies like Netflix and the success of on demand TV there is a growing shift in consumer demographics, and online, rather than satellite, is seen as the next battle ground. To highlight the importance of gaining broadband market share, BT has announced it will be extending this offer to broadband clients for another year.
The markets are expecting BT’s pretax profits to have grown from £2.5 billion to £2.549 billion, but expect the earnings per share to have dropped from 0.266 to 0.265.
The shares struggled since its mid-February highs, and breaking through the resistance at 390p will be the first issue before looking to tackling the year highs of 421p. The primary driving force for this will be the acquisition of broadband clients, we are cautiously optimistic.