BT has defended its lavish spending on exclusive soccer rights to show prime European soccer games, telling CNBC that it did not overpay and arguing that customers will get a better deal than they are currently receiving.
"We had an envelope, we came within that envelope and we generally believe we can monetize this and it makes commercial sense," Tony Chanmugam, chief financial officer at BT told CNBC Monday.
"Our (financial) guidance remains unchanged as a result of doing this, so we don't think we've overpaid."
BT will pay £897 million ($1.2 billion) for a three-year deal to show Champions League soccer from 2015 exclusively.
With the deal, the 168-year-old former state telecoms monopoly has beaten Rupert Murdoch's dominant pay-TV operator BSkyB to the rights as well as the U.K.'s biggest free-to-air commercial channel, ITV.
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BT will pay £299 million ($478 million) a season and will be the sole provider of Champions League matches on Tuesday and Wednesday nights. BT is paying more than double the £400 million BSkyB and ITV are paying for the current three-year contract.
Chanmugam added that customers are likely to get a better deal than currently given by rival Sky.
"We think we'll be able to provide the customer an alternative choice. Right now the customer has to pay £40 a month to watch Sky Sports. We think we can provide a competitive offering at a much lower price," he said.
"In terms of what we're doing in sport, the free offerings continue and what we have said is we will charge for Champions League. But the reality on that charging is, it could well be that the charge is zero if you take bundled services."
Analysts at Nomura were more concerned, cutting their outlook on BSkyB to "reduce" from "buy". They said the deal finally shows the scale of BT's
ambition and its willingness to overpay.
The deal will enable BT to broadcast games from Europe's finest soccer clubs, featuring the likes of Barcelona, Manchester United, Real Madrid and Bayern Munich.
It will also show the UEFA Europa League for three years, Europe's second-tier soccer competition. BT already has some rights to show 38 English Premier League games but more are currently available on Sky.