BT is offering me a higher pension now in return for lower increases in future. How do I get the best advice on what to do?
I am a pensioner and my former employer, BT, has offered me a higher pension in exchange for receiving lower pension increases in the future. I have never heard of such a scheme. Is this normal?
BT has offered the services of a helpline run by independent financial advisers (IFAs) before I make a decision, but I would prefer the advice of someone I am comfortable with. Can you suggest a course of action? BS, Derry, Northern Ireland
Since April 2009, retiring BT pension scheme members have been able to opt to receive a higher starting pension, by giving up some of their future pension increases. BT says it is now extending this voluntary option to existing pensioners, giving them more choice and flexibility.
You, and other members, will get detailed information on the option and how it would apply to you but, says BT, you will also need to speak to a freephone helpline staffed by IFAs before taking the option. It is right to steer you in the direction of an IFA (either the ones it pays for on its helpline or your own) as the decision is far from straightforward.
Nick Bamford, an IFA at Informed Choice, says you would need to take into account your future view on inflation (would you rather take, say £100 now with a guarantee your pension will rise in line with the RPI or would you prefer to have, say, £105 now and gamble on future rates of inflation?). You would also need to consider your financial situation (do you need more money now or are you likely to need a higher amount later?) and your views on your life expectancy. As you subsequently told us your life expectancy and provision for your wife is your major concern as you have inoperable prostate cancer, we suggested you take more general advice about your financial situation. You can find an independent financial adviser in your area via www.unbiased.co.uk.
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Ian Livingston’s annual earnings have risen to £8.5m after a 50% rise in BT’s market value in the last year
BT chief executive Ian Livingston’s annual earnings have risen to £8.5m, boosted by a rise in the company’s share price which will also see 1,000 managers share windfall payouts averaging £120,000.
Having overseen a 50% rise in BT’s market value in the last year, Livingston has been granted shares worth £6m from the scheme, which was designed as a reward for a three-year turnaround plan. His managers have received £120m from the pot of 38m shares, which was distributed following annual results last week.
“BT’s remuneration policy is based on reward for success,” a spokesman said. “The company has more than one million shareholders and they have benefited from healthy dividends, as well as a share price which has more than doubled over three years.”
Livingston’s bonus and the number of shares awarded were lower than last year, but because of the increase in BT’s share price, his overall package has risen from the previous £7.7m total.
He waived a pay rise for the second year in a row, taking home a base salary of £925,000, although his cash in lieu of pension contributions has risen to £270,000, £50,000 more than last year.
The chief executive’s cash bonus was £1.196m, effectively equal to his salary plus pension money, and he received a further £21,000 in other benefits which range from a company car to home security.
In addition, if Livingston is still chief executive of BT in three years, he will take possession of shares worth more than £2m at current prices.
BT will adopt government proposals on executive pay in 2014. These include binding shareholder votes and publishing a single figure for each executive’s total pay. The firm’s remuneration committee is chaired by former Labour health secretary Patricia Hewitt, who receives £160,000 a year for being a BT board member.
“Executive remuneration remains a lively and often controversial issue,” she wrote in the annual report, published on Thursday. “The committee has kept closely in touch with developments, recognising that this is a key issue for investors, employees and other stakeholders.”
During his tenure, Livingston has initiated a £2.5bn investment to replace copper broadband lines with fibre cables, serving two thirds of the UK population by 2014.
Earlier this month, the company kicked off what analysts expect will be a pay TV price war by launching two sports channels that will broadcast Premier League games free to those customers who already take BT broadband. The move has boosted BT’s shares, while denting those of rival pay TV companies BSkyB and TalkTalk.
Livingston has also tackled BT’s ballooning pension deficit, and kept costs under control at its global services division, which secures telecoms contracts from government organisations and large companies.
When Livingston joined in June 2008, global services was in trouble after signing too many unprofitable contracts. By March 2009, it had plunged to a £2bn operating loss. The division is still on a knife edge, but managed to report a £3m profit this year.
• Man Utd’s sluggish revenues
• BT’s sporting gamble
• What is Co-op’s raison d’etre?
• Stuart Rose off to a flyer
Contrary to some reports, Manchester United’s New York-listed shares did not plunge on Sir Alex Ferguson’s retirement. They ended the week 2.7% lower than they started it – that’s next to nothing.
But they should have plunged. By conventional financial yardsticks, the club is grossly overvalued at $3bn (£1.9bn) while also carrying £368m of debt. Now that the most reliable asset is giving up front-line duties, the stock deserves to be a double “sell.”
The valuation issue is basic: revenues were only £320m last year and half that sum was paid straight out as salaries. At the operating level, profits were only £44.9m. That entire sum was then consumed by finance costs of £49.5m, leading to a pre-tax loss of £4.7m. Naturally, there was no dividend.
None of which is to deny that the Glazers’ financial gamble has paid off. The £800m leveraged buyout in 2005 looked reckless at the time, not least because the adventure was funded in part with those notorious payment-in-kind (PIK) notes that accumulated interest at the potentially poisonous rate of 14.25%.
But the PIKs were paid off in 2010 and the moment of maximum financial danger passed. Ferguson kept the club in the Champions League every season and collected trophies. In doing so, he made the Glazers’ optimistic financial assumptions work. The current debt is clearly manageable. If the Glazers’ stone-cold equity investment was £500m-ish, they are clearly going to make a big profit if, and when, they sell their controlling shareholding.
It’s just that ascribing a £1.9bn value to the equity is wild. Manchester United may be the biggest football club in the world but it is not a large company. The Glazers have cranked up the commercial operation but overall revenues advanced by only 14% between 2009 and 2012. The current year has been stronger (revenues up 13% at the nine-month stage) but, for context, it will still take Man Utd 12 months to generate the revenues that Sports Direct achieves in 12 weeks.
The stock market valuation makes sense only if the Glazers can find somebody wealthier than themselves to pay the princely sum of £2bn-plus for the honour of owning Man Utd. The Premier League has become the playground of oligarchs and sheikhs, so it’s not out of the question. But the task looks harder in the post-Ferguson era. His presence was almost a guarantee of glory on the field. If that guarantee is ever seen to weaken, the short list of individuals with a couple of billion to spare may become even shorter.
The mistake made by failed entrants in the pay-TV market was to try to knock BSkyB off their effing perch, as Ferguson might have put it. That was always likely to be a losing game for the likes of Setanta and ESPN.
BT’s idea is smarter. Behind the obligatory bombast, chief executive Ian Livingston is clear that he is aiming only for co-existence with Sky. BT should be able to justify its three-year £1bn investment by attracting more broadband subscribers, especially from Virgin and Talk Talk. Analysts reckon one million extra customers would be a useful start. That goal ought to be within reach as BT completes its £2.5bn fibre network and pulls in viewers who want to save a few quid by living on a lower-fat sports diet. Sky will still have the gourmet sports dishes but, in a world of triple-play (broadband, TV and phone), BT’s offer looks competitive in a way that Setanta et al could never achieve.
The amazing part is that BT shareholders sanctioned the TV adventure with barely a grumble. Even three years ago, it would not have happened. Livingston was still in the early stages of reviving BT after its accident in its global services division, which runs big IT contracts. His back-to-basics formula has worked wonders: costs have been slashed, service has improved and peace has broken out with the pension fund trustees. The share price has risen from 70p in 2009 to 310p now, after Friday’s forecast-beating profits. The company is spitting out cash again and a £1bn investment is suddenly not such a big deal.
The worry for BSkyB must be what happens in three years’ time if Livingston maintains BT’s overall pace and makes a success of pay-TV. Would BT raise its ambition the next time the Premier League rights are up for grabs?
Welcome to the Co-op Group, Euan Sutherland. You thought you would be chief executive of an outfit with a challenger bank – your predecessor was full of such talk. It turns out you are actually in charge of a challenged bank.
The Moody’s downgrade of Co-op Bank’s debt to junk status does not imply a crisis for the bank’s customers. The boasts about ample liquidity are credible and there are ways to find more capital. A sale of the life insurance business has been agreed and the general business is on the block. If the regulators decide the proceeds are still insufficient, the Co-op Group itself – the ultimate parent – would have to dig deep into its collection of supermarkets and funeral homes.
But, if that prospect is even a vague possibility, it is time for the Co-op movement to consider its role in life. What is it in business to achieve? What is it good at? Are the capital demands of running a bank now too great for an organisation without shareholders?
The 2009 merger with Brittania Building Society should never have happened. As the Moody’s report makes clear, the Co-op “underestimated the risks” of a deal that brought a collection of soggy property loans and sub-prime mortgages. Nor would salvation have arrived via the now-abandoned deal to buy 632 branches from Lloyds. The Co-op would have become bigger in banking but there were “a number of challenges in terms of capital, liquidity and execution risk,” in Moody’s polite language.
Sutherland, who joined this month, is not a banker. He’s out of B&Q by way of Superdrug. His job now is to find some banking expertise, pronto – a point one assumes the regulators have made already. His second task is to spell out to his members what being a bank entails. Peter Marks, his predecessor, used to assert that there was unanimous support within the Co-op for expansion in banking. Really? Sutherland should find out.
How to make £1m. Sir Stuart Rose, when he agreed to become chairman of Ocado in January, was given 452,000 shares as a golden hello. The value of that award at the time was £400,000 and it matched the size of Rose’s purchase of Ocado shares from his own pocket. Now that Ocado’s share price has started to motor (90p to 224p since January), Rose’s freebie award is worth £1m. He can’t bank the sum since vesting depends on his remaining chairman for at least three years. Even so, he’s off to a flyer. Including the gain on the shares he bought himself, he’s up about £1.6m on paper. No bad going before he’s actually chaired a board meeting.
Central bank action, reasonable economic data and upbeat company results continued to support the market
Leading shares rose for the seventh day in a row on Friday, with the FTSE 100 index closing above 6600 for the first time since October 2007.
A combination of central bank action, reasonable economic data and upbeat company results continued to support the market as investors sought returns amid low interest rates.
In the wake of the rate cut by the European Central Bank earlier this month, a number of other countries followed suit last week in continuing efforts to boost the global economy, including Australia, Poland, Korea and Vietnam. The Bank of England however, as expected, refrained from further action after Thursday’s meeting.
Meanwhile signs of life in the eurozone, including positive German manufacturing figures, also helped sentiment.
So the FTSE 100 finished at 6624.98, up 0.5% on the day but off its best levels following a weak start on Wall Street. At the beginning of the shortened bank holiday week, the index stood at 6521. Since the turn of the year, it has climbed around 12% to its current five-and-a-half year high.
During the week both the Dow Jones Industrial Average and Germany’s Dax reached new peaks, while the Nikkei also hit its highest level since 2007.
Back in the UK, BT soared 12.3%, or 33.8p, to 309.5p on Friday after better than expected full year profits of £6.2bn, up 2%. TUI Travel also pleased investors, adding 6.3p to 346.9p as it forecast a profit rise of 10% for the year driven by strong trading in the UK and the Nordic region. It said 58% of its mainstream summer holiday programme was sold. The news came as it reported a first half operating loss of £289m, down from £317m as the winter season closed ahead of expectations.
Shire rose 85p, or 4.4%, to £20.19 following news late on Thursday that the drugmaker had won a patent trial against US group Actavis related to a generic version of its ulcerative colitis treatment.
Analyst Peter Verdult at Morgan Stanley said:”This news provides a much needed tonic, given the weak first quarter performance, and lack of significant pipeline data until 2014.Shire is committed to delivering revenue growth of more than 5% per annum, whilst moving to a flatter/more scalable operating structure involving five units (Rare Diseases, CNS, GI, Regenerative & Internal Medicine – ophthalmology) and a single R&D organisation. Efforts to bolster the mid/late stage pipeline are set to intensify.
“We see scope for Shire’s 15% discount [to the sector] to narrow sharply, given market confidence is likely to quickly rebound on the back of the near-term growth outlook improving.”
Brian White at Shore Capital said: “With sales of $400m, Lialda represented 8.5% of sales, and along with Pentasa, represents the cornerstone of the gastro-intestinal franchise. We had previously taken the view that, while there was a potential headline risk from a negative outcome, that the new FDA guidance requirements for generic mesalamine based products were so onerous that they would be difficult for the generic industry to overcome.
“Following the settlement with Actavis regarding Intuniv, success in this dispute with Actavis over Lialda does remove another drag on sentiment for Shire. Hopefully, we can now focus on the growth strategy that new chief executive Flemming Ornskov has recently articulated.”
Earlier in the week Shire was the subject of renewed bid talk. It has previously been linked with Bristol-Myers Squibb, Pfizer and AstraZeneca.
News that ArcelorMittal, the world’s largest steelmaker, had defied fears of a profit warning and kept its earnings forecast for this year helped lift Russian rival Evraz, controlled by Chelsea owner Roman Abramovich, 0.5p to 171.4p.
Controversial Kazakh miner Eurasian Natural Resources Corporation recovered a little ground after recent falls, and closed up 2.4p at 293.9p. Earlier in the week its two brokers resigned, while it also reported a disappointing production update, with iron ore extraction hit by a severe winter in Kazakhstan.
Among the mid-caps, Centamin slumped 7.7p, or 17%, to 37.9p, after the gold miner said a report on its Sukari mine in Egypt was not positive. A court questioned the miner’s right to operate Sukari in October, and now a report from the Egyptian State Commissioner’s office with non-binding recommendations has not helped its case. But Centamin said the recommendations do not address the merits of its appeal, which will be heard on 19 June, and it would continue to defend its rights.
Aim-listed Monitise added 4p, or 11.8%, to 38p after US hedge fund manager Leon Cooperman named the mobile payment group as one of his favourite stocks at SkyBridge Alternatives Conference in Las Vegas on Thursday.
Finally Quindell Portfolio, an acquisitive outsourcing and claims management business whose customers include the RAC, fell another 1.3p, or 18.3%, to 6p. After investors learned of a £13m derivatives contract revealed in its results this week, related to its purchase of Accident Advice Helpline, the shares slumped from 12p. The deal was financed by placing £17m worth of shares, with the derivatives contract designed to offer protection against a fall in the share price. As the market closed on Thursday, Quindell tried to stem the tide of selling by issuing a statement saying it knew of no valid reason for the share price drop. It said it had a strong balance sheet, the equity swap was not material in relation to the size of the company and was not likely to be exercised until the share price was substantially higher. So far these comments seem to have had little effect.
BT broadband customers get its three sports channels for free, so is it worth switching and what will you pay?
BT has announced that its broadband customers will get free access to its three sports channels from 1 August.
What sport will be available?
BT is offering three channels – BT Sport 1, BT Sport 2 and ESPN – which will show a range of sport from football to women’s tennis. The broadcaster has the rights to show 38 Premier League football matches and exclusive rights to show live games from rugby’s Aviva Premiership. There will also be some FA Cup games and Scottish Premier League games.
If you’re a football fan you will probably want to run BT Sports alongside your existing Sky Sports package, if you have one. If you are a rugby fan you might just want BT Sports.
How much will I have to pay?
If you are a new customer the monthly cost of taking broadband from BT is £10 on copper broadband or £15 on superfast fibre broadband with capped usage, or £16 a month for unlimited usage. On top of that you will also face a line rental charge of £15.45. To get the sports offer you have to commit to a 12-month contract. Anyone who signs up before 1 August when the channels go live will get free HD channels for a year; those who sign up afterwards will need to pay £3 a month.
When you join you will need to pay £6.95 P&P for the hub. That will be enough to let you watch the channels online. If you want to watch via your TV you will need to get BT TV. This costs £199 upfront with no contract, or £49 if you sign up for a TV package. The cheapest package is £5 a month and you need to sign up for a year. Signing up for BT Infinity, the package delivered through the fibre optic network, means an additional upfront “activation cost” of £30, while the alternative – watching through the TV aerial – will require you to buy a card for £10. Upfront costs can add up to more than £80.
I’m already with BT for broadband and TV, will I get the channels automatically?
No. You will need to commit to a 12-month broadband contract to get it, so you have to actively opt in to receive them. If, for example, you have two months left on an existing contract it can just be extended to 12 months; if you are two months into an 18-month contract you don’t need to make any extra commitments.
I’m with BT for broadband but have a Freeview box. What will I pay?
You can watch the sports channels on your iPad or PC for free through an app. If you want to watch on your TV you will need a set-top box. This costs £199 upfront with no contract, or £49 if you sign up for a TV package. The cheapest is £5 a month and you need to sign up for a year. There are also upfront activation costs (see above).
I’m with BT for broadband but have a Sky box. What will I pay?
You can watch BT Sports through your Sky box for free. You just need to call and request it, giving the details of your set-top box.
I’m with Sky for broadband, phone and TV. What would I pay to get the BT channels?
It depends what you want to do. BT and Sky have done a deal to show each others channels, so you could stay with Sky and add the BT Sports package to your existing deal. This will cost £12 a month, or £15 if you want HD channels.
If you decide to switch entirely you won’t need to pay for a new phone line, but you will need to pay for a new BT set-top box and pay all the activation costs detailed earlier. The cost of your line rental will also increase from £14.50 a month with Sky to £15.45 a month with BT, as will the cost of broadband, from £7.50 with Sky to £16 with BT.
However, BT is offering free broadband for six months, and as such over the first year it claims that the full phone, broadband and TV package will cost £134.65 a year less. After that you will pay £76.50 a month to get a full package including Sky and BT’s sports channels from Sky, and £73.95 a month to get it from BT.
A third option is to keep your Sky TV package and box and to move your phone and broadband. For that your only upfront cost will be £6.95 P&P for the hub.
I’m with Virgin Media for everything. What would I pay to get BT Sports?
Unfortunately at the moment you can’t add BT Sports to your Virgin Media TV package, so you need to switch provider entirely if you want the deal. You will need a new phone line, which means an upfront charge of £30, and your line rental will go up from £14.99 a month to £15.45 (although you can reduce that to £10.75 if you pay for a whole year in advance).
BT claims its total monthly cost of a TV, phone and broadband package including Sky Sports is £55.45, while with Virgin Media it is £66.74. If you wanted a package with TV, broadband and phone and just BT’s sports channels, not Sky’s, it would cost £35.45 a month at BT.
Is this just a one-year deal or will I have to pay next season?
BT says it has no plans to charge for sports next season, but the free HD offer will end after a year. After that, customers who want to continue with HD will pay £3 a month. The company has Premier League football rights for three years and the rugby rights for four years.
Should I be worried about switching provider?
We have had lots of complaints from readers who have tried to get BT phone lines fixed or installed in recent months, so you would be right to have reservations. However, BT says it has taken on new call centre staff and engineers to cope with the demand it expects, but if you want to make sure you get the channels in time for the start of the football season you would be wise not to leave it until the last minute.
BT said the ‘particularly big’ downloads are to blame for me exceeding my monthly broadband allowance
I thought others might like to know that I have succeeded in getting BT to refund an additional charge that appeared on my bill for usage over the monthly allowance included in my broadband package. I had not received any warning. At first I was given a sales pitch about upgrading my allowance. When I insisted on knowing why I had been charged extra without warning, the BT person changed tack and said that “due to technical reasons, in January and February nobody had been given an update”, and she would refund the £5. Result.
I have also queried what I could possibly be doing that took me over my 10GB monthly allowance, as I never download movies, games, TV programmes etc. The only thing that has changed in the last few months is that I now get the iPad edition of the Guardian. The sales person said it was a “particularly big” newspaper, and that was almost certainly the reason why I was going over my download allowance. Is that possible? Or is it BT eyewash? MP, by email
Firstly, well done for getting some money out of BT. Other readers who paid this extra usage charge over this period should take note and ask for the same refund. Secondly, you asked whether BT staff were spinning you a line about the Guardian’s iPad edition.
We asked our technical bods how much data our daily iPad download consumes. It seems the weekday edition uses 30-35MB, while the weekend editions take 50-60MB, which we estimate adds up to just over 1GB a month if you download it every day. So it seems that is unlikely to be taking you close to your 10GB monthly broadband limit. If you reach your limit again, ask the company to investigate or, better still, switch to an unlimited service.
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If TalkTalk’s complaint is successful consumers may benefit from cheaper superfast internet connections
BT is to be investigated for alleged “abuse of a dominant position” in the price it charges other internet service providers to use its fibre-optic network, telecoms watchdog Ofcom has announced.
TalkTalk has made a complaint to Ofcom, saying it wants cheaper access to BT’s fibre cables, which is uses to provide internet connections to its own customers, and accusing BT of “margin squeeze” in superfast broadband charges.
If TalkTalk’s complaint is successful, the intervention could lead to a price war with consumers benefiting from cheaper superfast internet connections as they did when Ofcom intervened to regulate BT’s copper broadband network.
The regulator has the power to set prices and impose fines.
The European Commission in 2007 fined Spain’s incumbent operator Telefónica €151m for unfair pricing stretching back over five years.
“We have long maintained that there needs to be tighter regulation in superfast broadband to ensure a level playing field and therefore deliver real benefits for consumers and businesses,” TalkTalk said in a statement. “We are pleased that Ofcom is taking this matter seriously and has decided there are reasonable grounds to investigate BT’s wholesale fibre pricing.”
The investigation is likely to be a lengthy one. Ofcom will now ask BT to open its books, but will not decide whether to pursue the case until the end of this year, and if it does proceed its final decision is unlikely to come before 2015.
BT said it was “disappointed” that Ofcom had opened the case. “We are confident there is no case to answer. It would be better if the industry’s and Ofcom’s focus was on investing in the future of the country rather than on spurious actions designed to hold up fibre in the UK.”
Separately, Ofcom will investigate whether BT’s fibre network should have price controls in future as part of a market review that gets under way in June.
Competition regulator had overturned an Ofcom decision which forced BSkyB to cut the amount it charges rival TV services
BT has won the right to take a ruling by the competition regulator that stopped BSkyB being forced to offer Sky Sports 1 and 2 to rival TV services at a discount of up to 23% to the court of appeal.
Last summer, the Competition Appeal Tribunal handed down a scathing judgment concluding that the basis of media regulator Ofcom’s decision to force BSkyB to cut the amount it charges rivals to air Sky Sports channels was “unfounded”.
BT challenged this decision at the court of appeal and on Friday was given the right to lodge an appeal. The court granted BT the right on the grounds that the CAT failed to investigate the issue of the level of discounts that BSkyB claimed it gave rivals on the ratecard price to air its sports channels.
The hearing is expected to be held in the next few weeks.
Ofcom proposed to introduce the new pricing structure, which would have made Sky Sports 1 and 2 up to 23% cheaper than the previous wholesale price in March 2010, after determining that BSkyB was abusing its power in the market.
Rivals including BT, Virgin Media, Top Up TV, the now-defunct Setanta, and new satellite players such as Real Digital all complained about Sky’s tactics.
Ofcom said that it was “very surprised and disappointed” when the CAT ruled against it last summer, but chose not take the issue to the court of appeal as BT has done.
“We are pleased that the court of appeal has granted BT permission to appeal the CAT’s pay-TV judgment and we look forward to explaining in the forthcoming trial why BT believes that the CAT’s judgment on this matter was incorrect,” said a spokeswoman for BT.
“We look forward to making Sky Sports channels available to our platform when we launch this autumn,” said David Henry, co-founder of Real Digital, which intends to launch a rival satellite pay-TV service by the end of the year.
A BSkyB spokesman said: “We note today’s decision of the court of appeal to grant BT permission to appeal the CAT’s judgment on the wholesale supply of Sky Sports 1 and 2. The court of appeal will hear the arguments of Sky and BT in due course.”
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The complex relationship between BT and BSkyB rests on gaining new customers for the former, rather than advertising
BT and BSkyB are at loggerheads. BSkyB is refusing to allow BT to advertise its new sports channels on Sky Sports, and BT has complained to Ofcom. Now leaving aside the fact that BT can (and does) advertise on any of BSkyB’s other channels, and that BSkyB and BT have both previously declined advertising from direct competitors – so there is plenty of precedent for BSkyB’s position – this dispute really is a storm in a teacup. What lies behind it, however, really couldn’t be more serious and the key questions are all for BT.
BT has spent upwards of £1bn on sports rights – mainly 38 Premier League games a year, top-flight rugby and WTA tennis. When you throw in production and other costs some analysts’ estimates put the total bill at nearly £450m annually. Sky has between five and six million sports subscribers and recent history with Setanta and latterly ESPN suggests that maybe a million of them will pay extra for the additional content BT will offer. Of course in addition to recruiting Sky customers BT will hope to attract new subscribers too, but even if it doubles that number to two million, simple arithmetic suggests it would have to charge them close to £30 per month just to cover costs.
Since no one seriously expects anyone to pay that much just for BT’s sports channels – which are still no real match and certainly no substitute for Sky’s – some analysts expect BT to lose in excess of £200m a year on them.
The only way of making sense of this from a BT investor’s point of view is to see it not as a loss but as an investment in improving the position of BT’s core business – broadband, and especially high-speed broadband. BT has been losing broadband market share to BSkyB – which from a standing start has gone to second in the market behind BT, the legacy operator, in just eight years.
The sharp end of that battle is the 2.5 million Sky TV customers who currently take their broadband from BT. Were BT to lose them, or even many of them – and on today’s trends that could happen – the loss of revenue (line rentals and broadband fees) could top £700m a year. Which is why BT really wants to package up its sports offering with its broadband services. In other words, for BT this is not about sport or even pay-TV, it is about broadband.
Which brings us back to the current spat over advertising. After Ofcom’s pay-TV review, BSkyB faced being compelled to wholesale its premium sports channels to BT at regulated prices. But with no obligation running the other way – on BT to wholesale to BSkyB – BT would then have been in the enviable position of promoting its YouView platform service as the only place to get all Premier League football. And that was the position last year when BT spent its £730m on football rights. But the Competition Appeals Tribunal decision to upend the Ofcom ruling means there is no obligation on BSkyB to wholesale its channels to BT at all.
BSkyB is now saying it will wholesale its premium sports channels to BT – allowing BT to sell them on to its customers – but only if BT will allow BSkyB the same arrangement with its sports channels. If such an arrangement was agreed, BSkyB would almost certainly drop its objection to BT running adverts on Sky Sports as the rivals would in effect be commercial partners.
But the problem for BT is that if BSkyB retails BT Sports as part of its offer to its customers, the telecoms company gets the money but not the customers – they belong to Sky. And no customer data means no capacity to try to sell them broadband packages. Which defeats the strategic point of spending £1bn on sports rights. Which could lead investors to wonder what else BT might have done with all that cash.
Half a year after moving into their new-build homes a group of owners are still waiting for landlines and internet coonections
When Margaret Thatcher died, her supporters said her privatisations had been an unmitigated success. No longer do we have to wait months for a telephone line to be connected, as was common in the bad old days before the hugely inefficient behemoth was given a dose of private sector efficiency.
That is the conventional narrative, but it sounds rather hollow for one group of homeowners in south London who have been waiting since last October to get a phone line installed into their new build homes. They have not been able to call family or friends and had no access to the internet for six months. Instead they have been relying on mobile phones and poorly connecting dongles to reach the outside world. In the week of Thatcher’s funeral, they are asking if there has been quite as much progress in the telecoms market as many think.
“When you see a new-build home, you can’t imagine it would take six months to get a phone line and broadband access installed in the capital city, but that is what has happened,” says one of the affected south-east London residents, Roland Rosser.
He and his wife, Pauline, who are retired, moved to their new home in Upper Norwood in January, and have been trying to get a phone line installed ever since. They wanted to move their TalkTalk service across from their previous home, but so far they are no nearer being connected.
“We were given a connection date of the 5 February,” Rosser says. “The man from BT Openreach said there were cabling problems, and nothing could be done. We have been ringing TalkTalk ever since, but they are reliant on Openreach getting their act together. Openreach won’t talk to us as we are not their direct customer, so the wait continues.”
He says the first residents to move into the development are in the same boat. None of the 23 houses has been connected, even though there are telephone sockets wired into each.
“We have been relying on mobile phones for calls, which is expensive, and to get emails I have to hang my laptop outside a window to get a decent signal for the dongle. I went to the developer’s office this week and the latest is that we have been given a day in early May. Will it happen, who knows?”
If the experience of other customers is anything to go by, the residents of Upper Norwood have only a 50/50 chance of being connected on the promised day. Guardian Money is receiving lots of similar complaints from people unable to get their home connected, with waits of several months commonplace. The delays are so bad that the advice for anyone who relies on a home phone and broadband is not to buy a new-build property unless the line has already been connected.
Despite the fact that almost 30 years have passed since BT was deregulated, only one company, BT’s Openreach division, can physically connect a home to the (non-cable) telephone system. Openreach was separated out from BT in 2006 and now has to treat all the phone firms equally.
The problem is that it is not answerable to consumers, and the regulator has done nothing to halt declining standards and long delays caused by a lack of engineers. It recently told the Observer it was monitoring the issue, but critics argue it has done little else.
Last June Money featured Nick Godley, who was so frustrated that no one at BT would reconnect his phone and internet service more than six weeks after he moved house – and that he couldn’t get a sensible answer from BT – that he took his complaint in person to the firm’s London HQ.
“I want to convey the unbelievable sense of frustration in trying to deal with BT’s call staff, in which no one seems bothered or is prepared to take ownership of a complaint,” he told a BT bosses directly. On the day Godley contacted Money, an email arrived from a reader who had been trying for three months to get a line installed for her 92-year-old aunt, who is blind and disabled and lives in a care home. Their stories are all too common.
There is a very telling page on the BT website community forum entitled: “What a nightmare to live in a new- built property!”. There, fellow sufferers swap tales of trying to get new properties connected to the network and the nightmare it has become.
“My experience with the call centre has been entirely appalling – incompetent staff who cannot assist or even escalate an issue or complaint,” wrote a typical complainant. “I have to wait until the 46 days after my order for another update … which will likely be ‘We can’t give you an update’.”
But after being contacted by Money, BT put their hands up. “We’d like to apologise to anybody affected,” said a spokesman. “Openreach scheduled the work as soon as we were told the site needed to be hooked up to our network. However, the team discovered a series of blocked ducts where they had intended to lay cables. This meant we had to carry out some complex engineering work. This has taken a lot longer than we expected. We hope to resolve the issue over the next couple of weeks.”