BT chief puts boot into BSkyB for 'buying customers' as shares slide

The chief executive of BT has accused its bitter rival BSkyB of “literally buying” customers with special offers as the company reported a slowdown in the growth of its fibre broadband business.

Analysts suggested momentum behind BT’s bundle of superfast broadband and live sport was weakening as it delivered interim results that added the fewest new broadband customers in two years.

BT shares slid more than 2pc on what Gavin Patterson, BT chief executive, called a “solid” performance. Investors were concerned in spite of a 13pc leap in second quarter pre-tax profits to £563m, which slightly beat City forecasts. Group turnover dipped 2pc to £4.38bn, but stripping out cuts to wholesale charges imposed by regulators, edged up 0.2pc.

BT’s consumer division attracted 88,000 new broadband customers, compared with 75,000 for BSkyB, a markedly narrower lead than it has enjoyed in recent quarters. In the three months to the end of June for instance, BT added 104,000 new broadband customers, more than double what BSkyB managed.

Mr Patterson said BSkyB was catching up because of heavy discounting and special offers such as the two-year free broadband deal it promoted when it launched a new Sky Sports channel in June.

He said: “We are still the number one in terms of net adds in the quarter. It’s almost half the market. It’s a good number.

“What is clear is our competitors are coming back and have launched some extremely rich pricing offers into the market. If you look at the cost of Sky’s package in Q2 versus Q1 they halved the price and threw in a Samsung Galaxy tablet.

“It is chasing volume and we’ve said look, we will be competitive but we’re not going to chase volume for the sake of it. We’re going to be disciplined about it.”

He said there was still “plenty of potential for growth” in BT’s consumer unit, which increased its revenues by 7pc on growth in broadband and BT Sport, highlighting its forthcoming attack on the mobile market.

BT had a lower share of the overall new broadband customers during the second quarter but continued to dominate in the superfast market, where consumers pay higher prices for faster internet access. Its retail division gained a 60pc share of the 344,000 consumers and businesses that signed up for the service via the BT network.

In total there are now 3.4 million fibre broadband connections, with 2.5 million of them sold by BT’s retail unit. Rivals led by TalkTalk have accused the company of abusing its dominance to operate a ‘margin squeeze’ by keeping its retail price too close to the wholesale price it charges.

Mr Patterson said BT’s grip on the market was loosening and that it had told Ofcom, which is examining the issue, its dominance was a result of early investment on.

He said: “We invested early, we promoted and created the market. Other providers didn’t and they are now catching up. That is one of the points we have made very clearly.”

Ofcom is also currently examining a complaint by Virgin Media about the Premier League rights auction, which BT will contest in the New Year. The cable operator argues that consumers are harmed by limits on the number of games that are broadcast. It highlighted analyst estimates that the total bill for three years could rise 60pc to £1.6bn per season.

Mr Patterson played down the risk of inflation this time but suggested BT would be happy to broadcast more football.

He said: “Clearly people want to watch Premier League games and it’s been good for our business. If we could show more we would show more.

“People talk about the risk of inflation but it’s not necessarily going to inflate. The prices we paid last time were pretty chunk to say the least. I don’t think you can just assume that inflation is guaranteed.”