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Soccer Wars Heat Up as BT Earnings Beat

Reuters with CNBC.com
Friday, 10 May 2013 | 2:14 AM ET
Andrew Yates | AFP | Getty Images

British telecoms company BT raised its core earnings and cash flow outlook on Friday after cost cuts and strong demand for broadband services helped it post full-year results slightly ahead of expectations.

The numbers come a day after the group announced it is to offer free live Premier League soccer games to its broadband customers for the first time in history, a direct challenge to BSkyB's dominance of the U.K. sports pay-TV market.

BT shares rose 9 percent on Friday morning after the results.

"Competition is a good thing, it's part of a capitalist society...we will be spending in the region of 1 billion pounds in growth costs," Ian Livingston, the CEO of BT Group told CNBC Friday.

(Read More: David Moyes to Become Manchester United Manager)

"We can do that bold move because we are becoming a lot more efficient as a business...It's going to be very, very high quality."

The telecoms group said full-year core earnings were up 2 percent at 6.2 billion pounds ($9.6 billion), ahead of a consensus of 6.1 billion pounds, but revenue was down 5 percent. BT raised its dividend by 14 percent.

BT CEO: We Can Afford to Make Bold Investments
Ian Livingston, CEO of BT, tells CNBC about their plans to make premier league soccer matches free for their broadband customers, directly coming up against Sky.

Livingston dismissed any talk that fixed phone lines were decreasing due to the increase in mobile phones, telling CNBC that fixed lines actually grew in the U.K. last year.

(Read More: Europe Is Strangling the Telecom Industry: CEO)

"The fixed line is actually being increasingly used for broadband," he said.

The group also announced a share buyback of around 300 million pounds for this year and next.

"With the story reliant on cost cutting for the past few years, a return to growth (which is enabled by investment paid for by efficiency savings) could lead to a re-rating by the market in our view. Consequently we upgrade BT to 'buy'," research analysts at Bank of America Merrill Lynch said in a research note on Friday.

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