BT Rises as Rugby Rights Promote Broadband Demand
Stock Chart for BT Group PLC (BT/A)
BT Group Plc (BT/A) surged to the highest price in four years after Credit Suisse said the U.K.’s largest fixed-line phone provider will benefit from accelerating broadband demand, and as it snatched rugby rights from a rival.
BT will gain more fiber business at the same time that the European Commission adapts a “more positive stance” on regulation, Credit Suisse said today in a note to investors. The bank raised its share-price forecast to 300 pence from 250 pence and reiterated an outperform recommendation.
BT is adding sports rights to expand its TV business and sell more broadband connections. The company has accelerated its rollout of fiber broadband by one year to fend off faster Web offers from competitors such as Virgin Media Inc. (VMED) and British Sky Broadcasting Group Plc. (BSY)
BT said today it will pay as much as 152 million pounds ($245 million) to show major English Rugby matches, taking away the broadcasting rights from BSkyB and ESPN. The rights to live Aviva Premiership rugby matches are currently split between BSkyB, controlled by Rupert Murdoch’s News Corp. (NWSA), and Walt Disney Co. (DIS)’s ESPN channel.
BSkyB said it will show European competition matches, disputing BT’s contention that it has those rights starting with the 2014 season. The European Rugby Cup will meet Sept. 18 to set competition rules, the organization said.
BT, which earlier this year added some rights for English Premier League soccer matches, will exclusively show 69 Aviva Premiership Rugby matches each season for four years starting with the 2013-14 season, the company said today in a statement.
“BT is serious about sport and this deal means we will be offering the very best rugby action alongside some of the most thrilling football matches from the Premier League,” said Marc Watson, chief executive officer of BT’s Vision service.
The TV rights deal will boost rugby club broadcast revenue by 50 percent as the number of games shown changes, said Paul Morgan, a spokesman for the league.
BT added Premier League soccer rights for the seasons starting in 2013 and 2015, and will start a channel to carry the games. The soccer deal will cut earnings before interest, taxes, depreciation and amortization by 100 million pounds and cash flow by 200 million pounds in 2013 and 2014, the company has said. BT will pay 246 million pounds a season for rights to 38 live soccer games.
The rugby deal also allows BT to show matches from the JP Morgan Asset Management Sevens Series for four years starting from the 2013-14 season and games of Aviva Premiership teams in any future European competitions for three years starting from the 2014-15 season, the company said.
Credit Suisse also said that the London-based telecommunications provider will become more efficient as employees retire.
“BT’s U.K. wireline business remains the most inefficient in Europe,” generating $243,000 a year per full-time worker, compared to a European average of $330,000, Credit Suisse said. BT will probably reduce its workforce by about 3,500 jobs a year, mainly through retirements, to bring it closer to the average, the bank said.
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