Barclays has trimmed its rating on BT Group (LON:BT.A), arguing that the telco could face increased competition for providing broadband infrastructure from wholesale-only providers, WebFG News reports. The comments come as the former telecoms monopoly prepares to update investors on its fourth-quarter performance on May 10.
BT’s share price has fallen deep into the red in today’s session, having given up 3.67 percent to 233.37p as of 13:19 BST, pressuring the benchmark FTSE 100 index which currently stands 0.17 percent lower at 7,530.13 points. The group’s shares have lost more than 22 percent of their value over the past year, as compared with a four-percent rise in the Footsie.
Barclays trims stance on BT
Barclays lowered its rating on BT from ‘overweight’ to ‘equal weight’ today, trimming its price target on the shares by 20 percent to 208p. The broker further revised down its forecasts for profit in 2019 and 2020.
WebFG News quoted the analysts as explaining that while there have been regular announcements about alternative providers building fibre to the home (FTTH), little has been done so far. After talking to Open Fiber, which is building a fibre-optic network in Italy, however, Barclays believed that there are opportunities for similar operations to do well in the UK.
Telco seen facing FTTH risk
As an incumbent, BT finds it hard to find the right wholesale price or accelerate FTTH build while facing a risk from alternative infrastructure providers if it does not accelerate FTTH.
“We see ‘wholesale-only’ providers potentially shifting the risk-reward profile for FTTH investment in Europe, principally in markets such as the UK and Germany,” the analysts pointed out, as quoted by WebFG News.
The analyst comments came after the former telecoms monopoly recently announced that it was merging its Business and Public Sector and Wholesale and Ventures units as it looks to simplify its business.