Bt Share Discussion Threads

[hamhamham1] 25/7/2018 12:03

This is probably why BT's fall today?
(on a positive side, even with this price re-rate, it still means a 25% upside to the share price from here) :)
And they do acknowledge that BT are tackling the issues, so that's good, but you can't expect all the issues to be resolved in a couple of months, I am happy with the progress to date.

BT has 7% dividend yield but lack of catalysts lead to RBC downgrade

RBC cut its rating on BT to ‘sector perform’ from ‘outperform’ and lowered its target price to 275p from 385p.

BT Group plc (LON:BT.A) has a successfully dealt with a number of overhanging issues but there are few catalysts to re-rate the stock in the next year, RBC Capital Markets said.

RBC downgraded the stock to ‘sector perform’ from ‘outperform’ and lowered its target price to 275p from 385p.

In reaction, shares fell 1.7% to 219p in late morning trading.

“Although BT is underpinned by a 8% free cash flow yield, a 7% dividend, and potential convergence benefits, we see few catalysts to re-rate the stock in the next 12 months," RBC said.

Lack of catalysts
RBC pointed out that BT is yet to confirm a replacement for outgoing chief executive Gavin Patterson, who leaves at the end of the year.

READ: BT boss Gavin Patterson to step down later this year
The broker thinks BT’s strategic position could allow it to use convergence to stop line loss and neutralise the threat from alternative networks but the company’s attitude of “safety first” and incremental approach mean this is likely to take several years before it becomes mass market.

BT’s convergence plans involve combining broadband, mobile and pay-TV as a single service and bill.

RBC also highlighted that BT expects a £1bn headwind over the next three years as a result of stricter regulation that forces the company to lower wholesale prices for its Openreach network.

This will mean lower input prices for competitors, allowing them to cut retail prices to compete with BT.

New KPIs 'may cause concern'
RBC said BT's new key performance indicators that it will use from the first quarter of 2019, do not provide details on broadband or mobile net adds.

“While we understand the desire to move away from 'net adds' as the market matures, not disclosing such important metrics may cause concern, given the widely held sceptical view that companies tend to obfuscate bad news,” RBC said.

“Indeed, reduced disclosure often, in our view, portends badly for future operational performance.”

Dealing with overhanging issues
More positively, BT has navigated through a period of regulatory uncertainty.

The company has settled its dispute with the Ofcom over the structural separation of Openreach and survived the government’s Wholesale Local Access review.

Another issue BT has dealt with is its pension scheme. Following the completion of its triennial pension review, it is swapping £2bn of pension deficit for financial liabilities via a bond issue to the scheme.

"BT has successfully dealt with a number of issues that have been overhanging the stock for the past 18 months," RBC acknowledged.

It added: "Having done the "hard yards", and with a 7% dividend, one could expect some easing of the environment and a potential relief rally (esp. if defensive stocks come back into vogue). However, we are hard pressed to find any catalysts that could cause the market to reassess BT's prospects in the next 12 months."

investors.co.uk/companies/news/201543/bt-has-7-dividend-yield-but-lack-of-catalysts-lead-to-rbc-downgrade-201543.html

(remove the space between proactive and ivestors to restore the link)

[knowing] 25/7/2018 11:57

When he sold :-)

[toon1966] 25/7/2018 11:23

I see you've changed your tune on the BT dividend Monty, when did this happen?

[hamhamham1] 25/7/2018 11:20

Monty. Hard to tell if levels are right with low share prices currently? - although its not really about the share price level to calculate the divi cover. (But going by the current cover ratio, then if anyone can justify it in the FTSE100, it's BT)
If BT can get the savings/efficiencies through (thus upping the EBITDA) and even if after the recent discounts announced by Openreach, if the divi cover is say over 1.5x - then I think the divi level is justified, we won't really know this for another 9 months I guess. (or even 21 months?)

[montyhedge] 25/7/2018 11:14

You know my thoughts I just can't see BT and Vod keeping the dividends at current levels. But even if cut in half still a good dividend.

[hamhamham1] 25/7/2018 11:05

I think Vodafone needed better figures to justify the 0.76x divi cover.


(published 26/6/18)

Forecast Divi Cover 2018
1.01x - Direct Line.
1.68x - Evraz.
1.14x - Persimmon.
1.36x - Taylor Wimpey.
1.12x - Centrica.
1.49x - Barratt Develpoments.
1.71x - BT.
1.38x - Imperial Brands.
1.26x - SSE.
0.76x - Vodafone.

1.29x - Average.

[hamhamham1] 25/7/2018 08:34

toon. Yep, and it's probably a good thing if it does I guess, as it will pull BT with it. The day is young though ;)
I usually see the first hour as the crazy hour, let's see where the direction heads between 9 and 10, maybe that'll give a better indication as to the days direction?

[toon1966] 25/7/2018 08:32

VOD actually doing better than BT at this moment, still a long way to go in the day!

[hamhamham1] 25/7/2018 07:06

I think Vodafone will be down today. Who knows?
Because they operate in so many countries (own in 25 countries and partner in another 47) the future cost of buying 5G licences (local gov cash cows) and the associated fibre backhaul provisioning needed will cost a lot over the next 5/10 years. (But they will come good no doubt).
Thinking about it, that does mean that 5G will be mostly only deployed I guess in 1st world countries with large legacy fibre networks?

[hamhamham1] 25/7/2018 05:47

Now that it looks like the spat between Ofcom and BT has been overcome (The FTIR report and yesterday's discount RNSs underline that).
That together with cost cutting, tackling pension deficit and general shake up will mean that BT can slowly start to report reasonable results and positive news.
I am not expecting too much this quarter but I really get the feeling that BT are genuinely heading in the right direction and prosperity will follow.

See below that 31k staff will be officially transferred to Openreach (ie separate legal identity).
That will move a lot of the current/historic pension burden to Openreach as well I think as most long serving or retired workers would fall under this business sector. IMO that is a good move if it happens.
(ie the gov cannot keep forcing the Openreach wholesale/home prices down, as it wanted this standalone business created and therefore must allow it to make enough money to increase fibre investment, run profitably and afford to pay debts/pensions etc).

[kmann] 24/7/2018 21:50

target prices increased all round, looking for 250p shortly

[hamhamham1] 24/7/2018 14:04

Ice. I don't see why not.
With this report, I think the share price will steadily climb.
And any bonus good news along the way, eg. quarterly results, new CEO, etc will give those extra boosts which are needed to punch through the initial technical resistance levels. e.g. 233p, 244p, 249p, 274p.
(And as the share price comfortably passes these points they will hopefully then nicely turn into a solid series of support levels)

[iceman82] 24/7/2018 13:59

ham what you reckon 240 before ex divi?

[hamhamham1] 24/7/2018 13:31

BT dodges bullet as analysts see government's full-fibre broadband pledge as positive

"Yesterday’s government infrastructure review moved the regulatory debate forward in a way that we think is supportive,” Jefferies said.

Pros and cons of infrastructure review for BT:

“Our 'first reaction' view is that the contents of the government's FTIR are very clearly positive for BT,” said Numis.

The broker said the proposals will reduce costs and barriers to investment. It will also promote "stable and long-term investment" since the government has suggested Ofcom reviews telecoms markets every five years instead of the three, Numis added.

Numis maintained a ‘buy’ rating on the stock and a target price of 325p.

Barclays believes the suggestion of increased regulatory certainty and rural subsidies “should be taken positively” for BT.

However, the bank noted that the government has suggested telecoms firms be given access to dark fibre in areas where duct and pole access is not possible.

The right of access to Openreach ducts and poles is currently restricted to networks used primarily to deliver broadband to small offices and homes. The FTIR said Ofcom should consider removing these restrictions on use “as soon as possible".

Barclays said for BT this risks loss of infrastructure market share, especially on its current fibre rollout, with alternative providers likely to “seize on the investment opportunity, setting up a likely land grab”.

Jefferies thinks BT will benefit from the FTIR since it creates a sense of urgency for upgrading the UK’s broadband infrastructure, recommends deregulation that will free Openreach from the prospect of price controls and gives priority on investment over interventions in retail prices.

It left its rating on BT at ‘buy’ but raised its target price to 250p from 245p.

“Yesterday’s government infrastructure review moved the regulatory debate forward in a way that we think is supportive,” it said.

investors.co.uk/companies/news/201445/bt-dodges-bullet-as-analysts-see-government-s-full-fibre-broadband-pledge-as-positive-201445.html

(Remove the space between proactive and investors to get link to work)

[lurker] 24/7/2018 11:03

Of course he's in...he's always in when its going up, and he's always short when its going down...thats how you get to be no 1 trader!

[gymratt] 24/7/2018 10:47

So you're back in then, Monty?

[montyhedge] 24/7/2018 10:39

You are getting excited, if my guess is right and its the ex CEO of Vodafone, I suspect he will kitchen sink everything, cut the dividend, he can blame the last guy and get BT back on track. But looking good at the moment, everyman and his dog piling in for Friday.

[kmann] 24/7/2018 10:28

Some good news out for BT recently.

What does the market like? CERTAINTY

looks like we broke the downtrend.

Time to load up this imo. With EVERY home getting plugged in to fibre, that means every home will start using it. And lets face it, more services being piped in to the home now, phone, bb, tv, smart home etc

Fibre is now an essntial service!

BUY 300p

[kulvinder] 24/7/2018 10:21

I think we will see £2.30 very soon, possibly £2.40 prior ex-divi...

[hamhamham1] 24/7/2018 10:14

Exciting times.
Happy holder.

[toon1966] 24/7/2018 09:49

As stated by Ham:

BT offers discounts to ISPs in push for faster broadband

(Sharecast News) - BT Group has offered discounts for internet service providers to upgrade customers to faster broadband as the government seeks to overhaul Britain's digital network.


The company said the offer, made by its Openreach infrastructure arm, should bring superfast and ultrafast broadband to most homes and businesses over that period.

BT said the plan was the result of months of discussions with companies such as Vodafone and TalkTalk to give them long-term discounts in return for commitments to upgrade customers from mainly copper-based services.

Clive Selley, Openreach's chief executive, said: "This offer is a win/win for communications providers, their customers and Openreach. It will help Britain's homes and businesses to experience the benefits of faster and more reliable broadband. And it will incentivise our wholesale customers to participate in our long-term investment in digital infrastructure by upgrading more of their customers to superfast and ultrafast services."

BT published its plans a day after the government said it would spend up to £5bn to connect the most remote parts of the UK to fast broadband as it attempts to catch up with rival countries to compete in the digital economy. The UK only has 4% full-fibre connections compared with 71% in Spain, 89% in Portugal and 28% in France, where coverage is increasing quickly.

On the day of BT's announcement Ofcom, the communications regulator, set out its own plans to encourage investment in faster broadband. These include regulating business and residential markets together, opening up Openreach's ducts and polls to more providers and more flexible regulation according to the level of competition in different parts of the country.

[montyhedge] 24/7/2018 09:09

My guess for the new CEO is the ex Vodafone boss Vittorio Colao.

[dmf] 24/7/2018 08:55

Possibly news on Friday regarding new CEO ..........who of course will be a person familiar with the telecommunications industry !!!

[iceman82] 24/7/2018 08:45

good rns , and share price responding well....