BT share price: Rivals set to attack group over profit rise

on Nov 3, 2016
Updated: Oct 21, 2019

BT Group (LON:BT.A) is set to come under pressure from rivals, having posted a sharp increase in the profitability of its telecoms monopoly, The Telegraph has reported. The news comes with the FTSE 100 group currently being under regulatory pressure to improve performance of its network division Openreach.

BT’s share price has fallen into the red in London this morning, having lost 0.89 percent to 368.90p, underperforming the benchmark FTSE 100 index which has climbed into positive territory and currently stands 0.16 percent higher at 6,856.19 points. The group’s shares have lost more than a fifth of their value over the past year, and are down by some 21 percent in the year-to-date.
The Telegraph reported yesterday that in the regulated accounts it must hand over to industry watchdog Ofcom, BT had revealed that its return on capital last year in markets it dominates was 17.9 percent, up from 14.2 percent. The figure is closely watched by the regulator and BT’s rivals to ensure that the former telecoms monopoly is not profiting too much from the infrastructure it inherited in privatisation.

The news comes against the backdrop of the ongoing debate whether BT should be forced to spin off its network division Openreach. The Telegraph notes that as part of their case for a split, Sky (LON:SKY), TalkTalk (LON:TALK) and Vodafone (LON:VOD) argue that BT does not invest enough in the network and makes too much profit from it. The former telecoms monopoly meanwhile defended its regulated accounts, saying that a significant proportion of the increase in its return on capital was caused by Ofcom decisions.
BT updated investors on its quarterly performance last week, posting a 35-percent rise in reported revenue, and a 10-percent drop in reported earnings per share for the three months to September 30.
As of 08:52 GMT, Thursday, 03 November, BT Group plc share price is 386.85p.

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