BT share price suffers as Brexit vote renews pension black hole fears

on Jun 29, 2016
Updated: Oct 21, 2019

BT Group (LON:BT.A) has underperformed other telecoms stocks in the past sessions, with last week’s Brexit vote reigniting fears over the FTSE 100 company’s massive pension deficit, The Telegraph has reported. Analysts at Macquarie have noted that investors fear that BT’s dividend payments could be sacrificed to meet the shortfall.

BT’s share price rallied in yesterday’s session, adding 4.15 percent to close at 391.45p. The group, however, has had around £4.6 billion wiped from its market value since last week’s vote, making it the telecoms stock worst hit by the vote outcome. The shares have extended gains this morning, having added 2.98 percent to 403.12p as of 08:03 BST.
The Telegraph quoted analysts at Macquarie as attributing the fall in BT’s share price to concerns over the group’s pension deficit, which stands at around £10.6 billion, marking a 50-percent increase from the BT pension trust’s last official review in 2014.

“BT’s short-term share price is Brexit-driven,” the broker’s analyst Guy Peddy pointed out. “The pension scheme deficit is mounting and could pressure mid-term dividend growth expectations.”
The comments come after analysts at UBS said prior to the vote that telecoms stocks such as BT Group, Sky (LON:SKY) and TalkTalk (LON:TALK) should ‘outperform’ under a ‘Leave’ scenario given the sector’s defensiveness and attractive dividend yield.
The Telegraph meanwhile quoted the former telecoms monopoly as commenting that it was ‘business as usual’ for the group despite the Brexit vote, as the shares hit a 19-month low this week. BT’s chief executive and chairman had previously written to staff, telling them that they backed remaining in a reformed EU, arguing that Brexit would have an impact on the economy, and knock-on effects on companies operating in the UK, including BT Group.
As of 08:09 BST, Wednesday, 29 June, BT Group plc share price is 391.45p.


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