BT: match fit? - FT.com This is threatening to be the greatest comeback since Newcastle United came from four goals down to draw with Arsenal two years ago. Shares of BT Group - the guys who five years ago could hardly pick up the phone without a negative stock market reaction - soared 12 per cent on Friday amid evidence that its painful turnround is paying off. BT is banking on football to deliver the next wave of customers. Taking on BSkyB at its own game is a risky strategy. But at least BT is in good enough financial shape to compete. Where did it all go right? When Ian Livingston took over as chief executive five years ago, he focused on costs. In the past four years nearly £5bn has been shaved from the cost base, freeing cash, which helped to boost investment, which is leading to rising earnings. But this coincided with a relentless revenue decline - BT's 2012-13 revenue of £18bn is at least 10 per cent below its 2007-08 level. The good news, obvious from Friday's full-year 2012-13 results, is that revenue decline was halted in the first quarter of this year. The other pleasing number is free cash flow - an annual £2.3bn, more than three times what it was four years ago. That helped to fund a 14 per cent rise in the full-year dividend, and should be repeatable if next year's target of £2.6bn of free cash flow is achieved. It also allows BT to maintain its relatively modest share buyback programme. The question is whether BT can compete in the football arena. It has paid about £750m for three years of live Premier League football (it will also show Italian and even American games), but is giving it away to broadband customers. The risk is that its product is not broad or deep enough to attract viewers away from Sky. And BSkyB is hardly going to take the competition lying down - its share price fell 6 per cent after BT unveiled its line-up on Thursday, which includes Rio Ferdinand and Michael Owen as pundits. Its coverage will at least not lack for statements of the obvious. BT's shares trade on 12 times current year earnings - nearly half as much again as its peers in Europe except Deutsche Telekom. Given how well BT is playing, that looks justified. But this game is not over.