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BT.A Bt Group Plc

2.80 (2.22%)
Last Updated: 12:58:26
Delayed by 15 minutes
Bt Investors - BT.A

Bt Investors - BT.A

Share Name Share Symbol Market Stock Type
Bt Group Plc BT.A London Ordinary Share
  Price Change Price Change % Share Price Last Trade
2.80 2.22% 128.90 12:58:26
Open Price Low Price High Price Close Price Previous Close
125.20 125.20 129.60 126.10
more quote information »
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Posted at 04/12/2023 20:41 by isis
Pension fund ownership of UK stocks hits record low
4 December 2023 • 6:22pm

Insurance and pension funds’ proportions in UK quoted shares slumped to 4.2pc in 2022, according to the Office for National Statistics (ONS).

It was the lowest proportion jointly held by them on record. The proportion has been falling since 1997, when the combined ratio owned was 45.7pc of UK equities.

Pension funds alone held just 1.6pc, the lowest figure on record.

The ONS said the fall may be because companies are “expecting more profitable returns on overseas shares” as well as changes in pension fund regulations.

The data show that at the end of 2022, shares in quoted UK-based companies listed on the London Stock Exchange were worth a total of £2.42trillion.

The proportion of UK shares held by overseas investors increased to a record high of 57.7pc of the value of the UK stock market.
Posted at 23/10/2023 11:27 by isis
Probably not a good Week, weak markets and this:-

On October 29, 1929, "Black Tuesday" hit Wall Street as investors traded some 16 million shares on the New York Stock Exchange in a single day. Around $14 billion of stock value was lost, wiping out thousands of investors.

Not to mention Halloween coming up! lol
Posted at 23/9/2023 14:36 by rathkum
BT Group: Shares Back In The Doldrums But Remain Cheap
Sep. 23, 2023 3:28 AM ETBT Group plc (BTGOF)
Mark Dockray

BT shares have turned sharply lower since around April. No stranger to disappointment, in this case there is little to grumble about operationally.

Concerns around the pension deficit may be a factor, given its size and exposure to assets like equities and property.

These shares once again trade at a deep discount to my estimate of fair value, albeit with a fair amount of uncertainty embedded in them.

BT Group (OTCPK:BTGOF) is nothing if not frustrating. Shares of the British telco have technically done just fine since my previous update in Q4 2022, returning around 13.5% in local currency and 11.5% for the ADRs, but performance to date still rankles a little given the stock was up over 40% as recently as April.

Data by YCharts

This company doesn't exactly have good form when it comes to not disappointing the market, but in this case I do think concerns are unrelated to what is happening at the business level. Indeed, I'd say that operationally the company is doing just fine. Growth is never going to blow the doors off of course, but a combination of low-single-digit revenue growth and operating leverage means that profits are up nicely at the moment. CapEx also appears to be by-and-large in line with expectations - one of my previous concerns given recent high inflation and the current large investment program.

My guess is that the pension scheme is what is weighing on the share price. That top-up payments to plug the deficit are a drag on free cash flow isn't anything new, but with the size of BT's pension scheme vast compared to its current market-cap I do wonder whether there is concern that the company might be on the hook for higher payments down the line.
All Looks Okay Operationally

BT's customer facing units are pulling in different directions. Like most of its peers, the segment that houses business customers (~20% of group EBITDA) is grappling with declines in legacy products like fixed voice. On the flip side, Consumer (~32% of EBITDA) is showing modest growth as broadband and cell phone contract renewals are linked to inflation. Openreach (~48% of EBITDA), which manages the UK's largest fixed-line network, is also putting in nice growth, likewise benefitting from inflation-linked pricing as well as the ongoing rollout of fiber-to-the-premises ("FTTP") broadband (which attracts higher revenue per user).

Most recent financial results are a little out of date now given we are near the end of the company's fiscal Q2, but Q1 was solid enough and was not the driver of its share price decline. Inflation-linked pricing mentioned above means that revenue and earnings growth are currently a little ahead of my long-term yardstick, with group FY23/24 Q1 sales up around 4% YoY and EBITDA up a shade more at 5%. Expected declines in Business (-11% YoY EBITDA) were more than offset by higher-margin Openreach (+12% YoY EBITDA) as well as Consumer (+6% YoY EBITDA). The full-year outlook - which sees growth in both revenue and EBITDA - was affirmed.
Little Change On Cashflow Forecast

One thing that had posed a slight concern to me was the impact of inflation on CapEx. BT's ongoing rollout of FTTP and 5G has seen CapEx rise to around 25% of revenue versus around 12% in the mid-2010s, and with higher inflation comes the risk that CapEx budgets end up heading unexpectedly higher still. That would mean even more of a squeeze on the company's already meagre free cash flow.

BT Group plc: CapEx To Revenue (FY15/16 - FY22/23)

BT Group CapEx To Revenue (FY16 - FY23)

Data Source: BT Group plc Annual Reports

Last year's CapEx spending landed broadly in line with prior guidance at circa £5B, and I reiterate that all the FY24 outlook metrics have been reconfirmed. That includes reported CapEx of £5B to £5.1B, with that seen steady out to the FY26 investment program peak.

BT Group plc FY30/31 Free Cash Flow Targer

Source: BT Group plc FY22/23 Annual Results Presentation

BT's longer-term free cash flow forecast remains unchanged, with base FCF (i.e. ignoring any contribution from growth) set to double from FY22 levels to around £3B by the end of the decade. Most of that (~66%) is from normalizing CapEx; the rest will follow from the associated lower costs (e.g. less maintenance) required to run a FTTP network versus the legacy copper one. This is all low hanging fruit for the company and I don't really see any risks in achieving this.
Pension Scheme Concerns To Blame?

Normalized free cash flow was £1.3B last year and is expected to be £1B this year at the low end. Taken at face value that all looks fine and dandy - enough to cover the dividend outlay (~£750m) with some change to spare.

The elephant in the room is the pension deficit. The situation is well-known to followers of the company and indeed it has been mentioned in most of my prior articles on the stock, but for the benefit of new readers, the short version is that BT has to support a huge pension scheme relative to the size of its actual business.

Top-up payments to address its pension deficit are substantial, coming in at a circa £1B cash outflow item last year and only expected to moderate to around £600m per annum from 2024 out to 2030. Subtracting this from the above free cash flow numbers leave us with relatively little actual near-term surplus cash.

BT Pension Scheme Asset Breakdown

Source: BT Pension Scheme Fact Sheet

Now, most of the scheme's assets are obviously in investment grade credit including government bonds. However, a not insignificant amount is in equities, property and other growth assets. My guess is that the market is worried that BT might end up on the hook for higher payments into the scheme should those asset values fall. Property, for example, is experiencing a fair bit of a pain right now due to the higher interest rate environment.
Shares Still Look Cheap

BT shares trade for 120 pence apiece at time of writing. As it stands, my DCF-derived fair value estimate from last time remains largely unchanged. That is based on consensus estimates for FY24-FY26 normalized free cash flow, plus management's longer-term forecasts (as show in the "Little Change On Cashflow Forecast" segment above), all discounted to the present at an annual rate of 9%. Subtracting net debt gets me to around £21B in equity value, or 210 pence per share (~$2.55 per ADR at the current GBP/USD exchange rate).

The wildcard is the pension scheme. Suffice to say that increased payments to plug the deficit would materially lower medium-term free cash flow and alter any DCF model substantially. Even so, an implied 80% discount to fair value already incorporates lower free cash flow to a large extent, and so I do think this is a risk worth taking. Strong Buy.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

This article was written by
Mark Dockray profile picture
Mark Dockray
I like to take a long term, buy-and-hold approach to investing, with a bias toward stocks that can sustainably post high quality earnings. Mostly found in the dividend and income section. Blog about various US/Canadian stocks at 'The Compound Investor', and predominantly UK names on 'The UK Income Investor'.
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Posted at 23/8/2023 11:22 by isis
I think it's the very fact that US investors aren't that bright that keeps them going. They are Herd investors and can drive up anything to anywhere.

A friend bought some AMC shares and was convinced they would go up to $500 because of the Dark Web shorting and asked me how much I thought they were worth. I said $5-$10 max because of all the debt but they still shot up to $70 as a meme stock, I don't think they sold and now they are back to $3 with a dfd share effort added of $2 making $5.
Posted at 06/8/2023 08:55 by diku
Property has been easy cash cow while rates were low for prolonged period...simplistic trick...values go up investors/owners borrow more to buy/renovate...extension, loft conversion, new kitchen, bathroom etc that recycles to trades connected to property is endless...
Posted at 02/8/2023 14:19 by porsche1945
this dogshyt will need a capital raise by next spring, will end up sub 80p….its just dross like vod and all the other capital destructive uk dividend junk. In fact all the brexit basket case GB indexes now by and large univestable for foreign investors so theres no bid for the stuff. One way its all going. down. great for shorting and trading tho, im up 48k on this and direct line Puts. Luvvin it.
Posted at 31/7/2023 21:00 by melegramforttongo
ScepticalInvestor31 Jul '23 - 13:19 - 44737 of 44743
0 1 0
Punters piling in now - taken a few myself

Now then….
Now then now then …. Look who we have here …

It’s that guy , me old buddy Skeppy ladddd
You’ve had a tough time on ADVFN skeppy fella … BOO , POLY etc etc
What are you up to now …

Good job you only use fantasy money as you can always find some more when you lose it .
However , I may be mistaken , but I think Sceptical investor was the first investor to lose all of his fantasy money … don’t ask me how that’s possible , but he managed it …. What a guy , what a legendary loser
Posted at 28/7/2023 08:04 by isis
UK retail investors have little interest in the Stock Market. The last time there was a big Bull market was in the late 90's and many got stung. I've always been an advocate of the Stock Market but with constant crashes It's probably better for most to get High interest Bonds, Gilts or Bank Accounts.
You talk to anyone from the States and most have a good idea what the markets are doing and hold shares in some form, but they have a different attitude to risk and go for it.
Just look at Apple worth more than the whole UK stock market on it's own!
Posted at 26/7/2023 06:13 by nige co
I don't believe that Drahi, a billionaire would invest billions in a company that he wasn't sure of the outcome. He's not here to lose money. He hasn't become a billionaire by being foolish. So that leads me to think that he will be a winner in the end, he's playing the long game, he's got something lined up, that he must be pretty sure of the outcome. Time will tell, hopefully.

Since Drahi started purchasing his BT shareholding, the share price briefly breached £2 in June 2021, I would guess based on his share purchasing, before falling back. He purchased more shares and the share price almost touched £2 again in July 2022, he's since purchased his last lot with no reaction to the share price, now down at a depressed 124p. How many more times can the BT tree be shaken of weak investors. Is managements hand weaker now that Jansen is resigning in regards defending a bid. I think so. Is Drahi building his stake to do a deal with DT, who have said previously that they could make a deal with BT.

All things considered, is it now or never for a takeover bid?
Posted at 19/7/2023 07:34 by institutional investments
Good company but a lot of infrastructure to roll out yet. Won't be beating expectations for a while. Can't see 2023 being the year here. But agree, if share price halves or more, definitely potential for investing in then if call comes.

Should be strong enough to bring in more income investors by then too but for now, would suspect share price cull very much to outweigh Yield in the medium term

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