* FY rev down 5 pct at 18.25 bln stg vs consensus 18.1 blg
* FY adj EBITDA up 2 pct at 6.2 bln stg vs consensus 6.1 bln
* Expects 2014/15 EBITDA to rise to 6.2-6.3 bln
* Ups FY div 14 pct to 9.5p, plans 300 mln stg buyback
* Shares up 9 percent, hit 5-1/2 yr high
(Adds TV details, updates shares)
By Kate Holton
LONDON, May 10 Britain's BT underlined
its return to form ahead of its pending pay-TV battle with BSkyB
, revealing across the board improvements that put it on
course to regain the upper hand in the telecoms sector.
Its shares leaped more than 10 percent to their highest in
some 5-1/2 years.
The 167-year-old former state monopoly, which was brought
low in 2008 by a series of profit warnings, posted full-year
results ahead of expectations and showed for the first time it
could be close to returning to overall revenue growth.
The results followed a tough cost-cutting drive imposed by
Chief Executive Ian Livingston, which enabled him to steer the
group through the economic downturn by raising profits and the
dividend while still investing in a superfast network.
"We are doing what we said we would do," Livingston said.
"In an environment where it is easier to focus only on the
short-term, we are investing in our future and delivering growth
in profits and dividends."
With BT's fibre network now available to more than half of
the homes and businesses in Britain, BT will soon embark on the
next phase of its strategy - offering free English Premier
League soccer to customers in a direct challenge to BSkyB.
The offer is designed to increase customer loyalty and win
back some of the millions of broadband and telephone customers
who have dropped BT in favour of BSkyB, Virgin Media
and TalkTalk in recent years.
The surprise announcement of the free offer on Thursday sent
shares in rival groups tumbling and revealed the depth of
concern among investors in a sector that has grown recently by
persuading existing customers to pay more for an increasing
number of services.
That strategy, employed particularly by Rupert Murdoch's Sky
and Virgin, could now prove a lot harder.
"The risks to all operators in the UK market are clear,"
analyst Robin Bienenstock at brokerage Bernstein said. "We think
that this is the end of price inflation in the UK Pay TV market,
ushering in an era of increasing pressure on TV margins."
While BSkyB still owns the rights to much of the most
attractive programming available in Britain, the move by BT
shows its long-term intent to compete aggressively in the pay-TV
market, while using its scale to absorb the required costs.
"We believe that the move is logical," Liberum analyst
Lawrence Sugarman said. "We suspect that BT is prepared to
pursue this strategy because it is coming from a position of
The results released on Friday showed how BT has recovered
from tough times in 2008 and 2009 and are testimony to the
success of a strategy put in place under Livingston since his
appointment in June 2008.
Adjusted EBITDA or core profit was up 2 pct at 6.2 billion
pounds against a forecast 6.1 billion, despite revenue for the
year through March being down 5 percent, or 3 percent on an
The performance contrasts with recent statements from BT's
peers in continental Europe, which are being squeezed by weak
economic conditions, stiff regulation and increasing
Spain's Telefonica for instance, Europe's biggest
telecom group by revenue, this week reported an 11.7 percent
drop in revenue from its European operations to 6.7 billion
euros. Its shares are worth about half their value set in a 2008
Shares in BT were up 10.5 percent by 1230 GMT, topping the
FTSE 100 gainers list and adding to the 26 percent rise in the
stock recorded in the last year.
BT benefited from strong demand for broadband and its new
superfast fibre network, which is being sold to around 1.3
It raised its full-year dividend by 14 percent to 9-1/2
pence per share and announced a share buyback programme of 300
million pounds for this financial year and next.
It also nudged its outlook higher, with free cashflow now
forecast at 2.6 billion pounds in 2014/15, compared with an
earlier forecast of 2.5 billion.
"BT has hit a sweet spot," said Richard Hunter, head of
equities at Hargreaves Lansdown Stockbrokers. "Prospects for the
company look extremely attractive. In addition ... the company
has underlined its confidence in providing earnings visibility
two years out."
($1 = 0.6453 British pounds)
(Editing by Christine Murray and David Holmes)