* BT sports vying with BSkyB
* Both have rights to Premier League matches
* Shares slip due to rising cost of sports rights (Adds viewing figures, shares)
LONDON, April 30 (Reuters) - BT will provide its sports channels for free to British broadband customers in the next soccer season, extending an offer made when it launched last August as a rival to BSkyB, the dominant pay-TV company.
Former state telecoms company BT is investing around 2 billion pounds ($3.4 billion) on sports rights, adopting BSkyB's trusted model of using sporting content to attract customers.
BT and BSkyB are battling for the upper hand in a converging market to supply broadband, telephone and television services to British households.
They share the live rights to English Premier League soccer matches although BSkyB is able to show more matches than its rival.
"The great news for fans is that BT Sport will remain free with BT Broadband for another season," said John Petter, head of BT's Consumer business, announcing the extension of the offer on Wednesday.
BT said around 5 million homes were taking the service.
BT broadband costs from 6-8 pounds a month for the first six months but prices double for the remaining year of a contract.
BT shares were 1.4 percent lower at 368.6p by 1140 GMT, while BSkyB dipped 1.1 percent to 879.5p. Analysts say that the higher cost of sports rights could hit both companies' margins.
BT said it was attracting average audiences of 774,000 for its Premier League games, most of which are shown on Saturday lunchtimes.
BT has also acquired the rights to European Champions League soccer for three years from 2015 in a 900 million pound deal after outbidding BSkyB.
It is expected to charge for access to Champions League soccer to help recoup that investment although details have not been disclosed.
($1 = 0.5936 British pounds) (Writing by Keith Weir; Editing by Susan Fenton)