BT share price under pressure amid concerns over biggest shareholder

on Nov 11, 2016
Updated: Oct 21, 2019

Shares in BT Group (LON:BT.A) closed deep in negative territory yesterday, underperforming the broader market selloff, amid concerns that the telco’s biggest shareholder, Deutsche Telecom, has been cooling on its investment. The concerns come shortly after another major investor called on the former telecoms monopoly to open discussions with shareholders over a possible voluntary sale of its network division Openreach.

BT’s share price closed 4.12 percent lower at 347.85p yesterday, as compared with a 1.21-percent drop in the benchmark FTSE 100 index. The telco’s shares have lost over a quarter of their value over the past year, as compared with a more than seven-percent rise in the Footsie.
The Financial Times reported yesterday that during a post-results conference call, Deutsche Telecom’s chief executive Tim Hoettges had said that while the board had no worries about BT operationally and had not discussed selling its 12-percent stake, it is “very open minded and awake” to Brexit uncertainty and the effect of low bond yields on the group’s pension deficit. Hoettges added that of most concern was the pressure on the UK telco to spin off its Openreach network arm, a structural separation, which he argues, ‘makes no sense’.

BT is currently under regulatory pressure to overhaul the division, having avoided a full-blown break-up earlier this year. Industry regulator Ofcom, however, has left the option on the table.
The comments come after The Telegraph recently reported that Aviva Investors, which has a stake in BT worth hundreds of millions of pounds, had said that now was the time for the blue-chip telco to open discussions with investors about a potential split with Openreach.
The 22 analysts offering 12-month price targets for BT Group for the FT have a median target of 475.00p, with a high estimate of 580.00p and a low estimate of 310.00p. As of November 4, the consensus forecast amongst 25 polled investment analysts covering the stock has it that the company will outperform the market.
As of 08:06 GMT, Friday, 11 November, BT Group plc share price is 351.65p.

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