BT share price: Group braced for further pensions blow

October 21, 2019

BT Group (LON:BT.A) is braced for a further pensions blow, with a new valuation of its retirement fund expected to point to a £14-billion shortfall, The Sunday Times has reported. The news follows the telco’s fourth-quarter results last week when the company unveiled plans to slash 4,000 jobs as it restructures its business, and strip its chief executive Gavin Patterson of his annual bonus in the aftermath of an accounting scandal at its Italian division.

BT’s share price rose on Friday, surging 2.72 percent to close at 305.95p, outperforming the broader London market, with the benchmark FTSE 100 index adding 48.76 points to end the session 0.66 percent higher at 7,435.39. The group’s shares have lost more than 30 percent of their value over the past year, and are down by some 16 percent in the year-to-date.
The Sunday Times reported yesterday that the trustees of BT’s pension plan were expected to publish their annual funding update within weeks, with analysts saying that the shortfall may have increased to as much as £14 billion by the end of June last year, up from a £10-billion deficit in the prior-year period.

While BT revealed in its fourth-quarter results last week that its pension deficit had widened to £7.6 billion at the end of March, the newspaper notes that the trustees use a different methodology to calculate future liabilities. The upcoming update will set the scene for a triennial formal health check of the scheme, which kicks off in the summer.
The 20 analysts offering 12-month price targets for BT for the Financial Times have a median target of 372.50p, with a high estimate of 450.00p and a low estimate of 270.00p. As of May 12, the consensus forecast amongst 22 polled investment analysts covering the former telecoms monopoly advises investors to hold their position in the company.
As of 08:00 BST, Monday, 15 May, BT Group plc share price is 305.95p.