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Investment bank says shareholders should question telecom group’s latest move
Thursday 09 Mar 2017 Author: Tom Sieber

A belief in the analyst community that inflation in the cost of sporting rights might be abating looks forlorn.

Telecoms giant BT (BT.A) is paying 32% more than its previous three-year contract for exclusive rights to broadcast Champions League football from 2018 to 2021.

The £1.2bn total amount is three times the value of the joint deal agreed by Sky (SKY) and ITV (ITV) before BT entered the market two years ago.

The spiralling cost of sporting rights is unhelpful at a time when BT is battling an accounting scandal in its Italian operations and straining under the weight of a £14.2bn pension deficit.

A key question for investors is whether the company can sustain the 10% dividend growth promised for this year and next year.

Investment bank Jefferies says: ‘The speed with which (the new) auction result has followed the start-of-March deadline for tender submissions would suggest that BT faced limited opposition from Sky (or anyone else), and that bidding did not go to multiple rounds.

‘BT shareholders might, therefore, question how necessary it was for their company to meet UEFA’s price expectations in full. Moreover, we wonder what this implies for BT’s negotiating leverage in future UEFA rights auctions.’

Elsewhere key rival Sky’s £18.5bn takeover by Rupert Murdoch’s 21st Century Fox looks set to be tied up by regulatory scrutiny as UK culture secretary Karen Bradley says she is ‘minded’ to refer the deal to regulator Ofcom on public interest. (TS)

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