BT share price: Telecoms giant rules out disposal of Global Services unit

on Nov 17, 2014
Listen, Monday, November 17: BT Group Plc (LON:BT.A) has ruled out a spin-off or sale of its outsourcing business Global Services, despite facing pressure from several major shareholders to offload the business, The Telegraph reported over the weekend.

According to the newspaper, the telecom giant recently held internal talks about a sell-off that could raise around £10 billon, fuelling speculation about the division’s future. However, on Saturday the company confirmed that it had no intention of selling the unit.
“”BT has no plans to sell its Global Services division””
“BT has no plans to sell its Global Services division,” a spokesman for BT told The Telegraph. “It is a much improved part of the business and we are pleased with the continued progress it is making.”
In today’s trading, BT shares were down 0.4 percent at 372.63p as of 11:09 UTC. The company’s stock has fallen 1.9 percent since the start of the year.
*h*Global Services*h*
Founded 20 years ago through a merger of BT divisions, Global Services is currently widely seen by investors as a non-core asset that weighs on BT’s main business. Over the past five years the unit has undergone a major reorganisation and cost cutting programme in order to improve its disappointing performance. These efforts have produced results, improving the unit’s profitability. However, it still remains BT’s lowest-margin division.

Some of the company’s shareholders told The Telegraph that they would support a disposal of the unit.
The newspaper quoted ‘one major shareholder’ as saying: “We’d be supportive of a demerger because we think the stock market would value Global Services at a much higher multiple and we tell management every time we see them that we’d like to see them do it.”
Another ‘leading investor’ has suggested that an exit from the IT outsourcing market would be a ‘very good idea”.

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However, other shareholders have cautioned that divesting the business could be difficult as there are significant crossovers with other parts of BT, particularly in the domestic market.
*h*Analysts on BT*h*
According to the Financial Times, the 20 analysts offering 12 month price targets for BT have a median target of 455.00p, with a high estimate of 600.00p and a low estimate of 245.00p. As of November 15, 2014, the consensus forecast amongst 39 polled investment analysts covering BT has it that the company will outperform the market. The same consensus estimate has been maintained since the sentiment of investment analysts improved on November 05, 2013, the FT notes.
**As of 12:53 UTC buy BT shares at 373.30p**
**As of 12:53 UTC sell BT shares at 373.10p**


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