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BT Sport sale is a crowdpleaser, but the real story is off the pitch in its pension deficit

Jim Armitage
·2-min read
BT Sport commentators at a Premier League match (PA Wire)
BT Sport commentators at a Premier League match (PA Wire)

Earlier this year, when rumours spread that BT chairman Jan du Plessis was at war with his chief executive, the company waited a week, then issued a mealy-mouthed stock market statement only partially denying the gossip.

The pointless declaration merely renewed investors’ attention to what was, while true, a relatively private matter for the board.

They should have kept a dignified silence.

After reports last night that CEO Philip Jansen was looking to flog BT Sport, the ensuing stock market announcement to confirm the story today was far more appropriate.

For this is a major shift in the corporate tone on what his predecessor Gavin Patterson had envisaged. Exclusive sport content was, Patterson gambled, the way to drive more households to take up BT broadband packages.

The idea worked, and BT shares shot up at first, but as the crisis of Britain’s dreadful broadband service grew, it became widely seen as a bauble distracting management from their day job: laying more fibre and improving dismal service levels for its telecoms clients.

BTSport became a very noisy story, but, as analysts at stockbroker Berenberg pointed out today, it probably only represents around 4% of BT’s total value.

Getting shot of it, then, will be hugely symbolically important for Jansen, but will not represent a stunning U-turn for BT’s fortunes.

Far more important is the critical, albeit duller, issue of BT’s gargantuan pension deficit, which is about to come up for its three-year review.

Currently, BT has to shove in around £900 million a year to keep filling the hole.

But Berenberg’s hope is that next month BT will announce that the deficit has narrowed to £7.5 billion - a full £2.2 billion lower than predicted.

If true, BT could cut its contributions to the fund by literally hundreds of millions of pounds in future years.

Now that really would be worth shouting about to the Stock Exchange.

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