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Mr Tang has his opinion, I have mine. BT's bottom line will be under pressure for the next few years, but that's because they're heavily investing in FTTP and 5G. As far as the pension deficit, time will tell, but it appears the deficit is currently reducing going off Otto Thoresen's recent statement, in the BTPS 2021 Annual Report and Accounts. The deficit isn't an issue anyway, as BT have already agreed a deficit reduction plan. The only reason, I can think of, why analysts like Mr Tang keep highlighting the deficit is to increase negative sentiment toward BT, possibly because they have a vested interest to do so. It's up to other's what they do, but I see the current price drops as an opportunity to top up.
This Fleccy is off ii article .
The view of UBS on BT is much more pessimistic ahead of the telecoms company reporting second quarter results on 4 November. Analyst Polo Tang's anti-consensus “sell” rating is based on rising infrastructure competition for the Openreach division.
He also doubts whether the upward trend for gilt yields will be as supportive for BT's share price as many assume. There's been a relatively close correlation between the two in the past three years, but going forward the company's actuarial pension deficit is likely to be less sensitive to gilt yields due to other moving parts in calculations.
Every 110 basis point increase in gilt yields is now only a £200 million reduction in the actuarial deficit, whereas every 0.7% increase in the rate of inflation is a £1.6 billion rise in the deficit.
UBS expects BT to report weakening financials quarter-on-quarter and mixed operational trends in the Q2 results, leading to a consensus forecast showing earnings 3% lower.
There might be an update on BT's previously announced suggestion to consider a full-fibre joint venture allowing Openreach to connect up to five million more homes. The division is currently working on its own plan to spend £15 billion on upgrading 25 million homes and businesses from copper phone networks.
Openreach's value is based on the annual guaranteed revenue of £5.odd Billion from BT and external customers.
True but BT still own everything that runs the network it’s too complicated to say they can just sell it and BT will never just sell it imo….
10 years ago when Murdoch and White were pushing for OR to be sold off BT built an alternative workforce called mobile and TV… a totally separate workforce doing the same as OR services delivery…. Thousands of ex army navy etc and others …. Only once the threats of OR being separated from BT rescinded then BT and OR combined them… imo had OR been separated then BT would have sold OR as a maintenance company contracted to install and maintain etc on their the BT owned copper and fibre network and still left BT with a wholly owned engineering workforce running along side…
BT always think the long game and this fibre roll out and equinox has flummoxed them again.
To me the market is trying to hurt BT right now because the market cartel inc GS are investing in altnets left right and centre and the obvious point of attack is BT…the big driver being OFCOM decision not to interfere with OR pricing for 10 years and to leave copper SLGs at 18-19 levels until 2026… that’s a huge advantage for OR/BT..
Also BTPS recently reported that the deficit had recently reduced significantly anyway:
Definitely fleccy… the latest pension reports are very encouraging…. I reckon in 6 years it’ll be zero deficit… the payments will be increased circa cost benefits but it’s another stick of grass to beat BT with… sounds awful but it actually doesn’t hurt in the slightest imo
"Not sure why OR would be worth £20 billion as all they are is a workforce in reality"
Openreach's value is based on the annual guaranteed revenue of £5.odd Billion from BT and external customers.
Plus for added measure and one the hedge funds and institutions who spout ball****s are forgetting is that once the fibre is rolled out then there is at today’s prices Circa £30 Billion of copper cable lying redundant in the network and as I previously posted BT have already employed outside contractors to identify and recover once FTTP is completed in that exchange area…. The hidden fortune…. It’s all priced in to BT senior management plan.
"The pension deficit seems to be never ending hangover a £1.6 billion increase per 0.7 inflation increase seems to depend on where you sit on inflation."
Me12345, where do you get the £1.6 Billion? If you used the FY20 figures:
"£5.4bn increase for 0.7% increase" (Liabilities)
"£4.2bn increase for 0.7% increase" Assets
Doesn't that come to £1.2 Billion per 0.7% increase? And they may have hedged even more since 2020.
Also BTPS recently reported that the deficit had recently reduced significantly anyway:
"An interim assessment was carried out as at 30 June 2021.
Whilst the full results of this assessment will not be available
until later in 2021, initial calculations suggest the estimated
Technical Provisions deficit has reduced over the Scheme
year from £8bn to around £4.6bn. The main reasons for
the reduction in the deficit are the deficit contributions
paid by BT (which include an Asset Backed Funding (ABF)
arrangement of £1.66bn) and a higher than assumed return
on the Scheme’s ‘growth’ (i.e. equity and equity-like) assets.
With this reduction in deficit, the agreed contingent
contributions should we fall behind plan and with the
increased resilience in the investment strategy, we believe
we have an enduring funding solution giving us greater
confidence that the Scheme’s objectives will be achieved"
https://www.btps.co.uk/MediaArchive/SchemeSite/BTPS352_BTPS_Report_and%20Accounts_August2021_V17_30Sept.pdf
Not sure why OR would be worth £20 billion as all they are is a workforce in reality… BT owns the network and OR have no real assets..
Does anyone actually know how much BT spent on EE alone...? £12.5 billon is the answer. BT now valued at £14 billion. Then add in Open reach which is worth at least £20 billion and BY sports at £2.5 billion....
It sounds like lots of you never lived through the £15 to 65p ish drop 99-07 lol man up ffs
A 130p floor is probably a result at the moment.
The steepness of the decline from 205p is rather terrifying - looks more like a 120p than 130p?
Seems to me ubs has valid points why they come up with £1.30 price target .The pension deficit seems to be never ending hangover a £1.6 billion increase per 0.7 inflation increase seems to depend on where you sit on inflation.For me a few interest rate rises along with significant drop in oil gas commodities prices as we come out winter will tame inflation.Think next results are going to disappoint and lack of news updates we have been waiting on .But think will give braver buyers opportunity with lower price entry with surly some corporate action to follow.Any one heard any news on the 600million court case?
Think the antagonistic troll was referring to me Fleccy.
He must live a very sad existance trolling round the boards pontificating.
Uncle Dung just cos you asked nicely.
I bought in on 05/03/21 @ 11.01am. Price paid 40.5879. feel free to check back.
Currently 49p ish.
So i make that (in round numbers) about 18% UP.
We're not all as incompetent as your goodself.
Dont know why you keep trying to cause trouble and antagonise, i blame the upbringing.
"Just out of interest how much you down on LLOY?"
The break even on my Lloyds shares is just under 51p, and I'm currently down a midges over £5000.
Daytrade: "biggest value holding rdsb currently (cant remember figure without logging into Hl), second biggest is Glen with just over 85k shares, then BP, RYA, CEY, LLOY, TGA and a few smaller ones. Pf value, again without logging in, circa 850k."
Just out of interest how much you down on LLOY?
True Fleccy, regarding VMo2. The other thing that comes to mind is as far as is known they were intending to upgrade there network without any wholesale access to it, just expand it by building there own ductwork and accessing OR ducts as well to grow there geography. So that would be a network only for them and O2 and the architecture would be designed around sole use. If as has been suggested they want to now offer Sky wholesale access then they would have to offer it to anybody who also wanted it, eg Talk Talk. So that would change the architecture of the network needing a change of technology to allow multiple access to the same fibres. A bit like starting from scratch again, then they do have a habit of not being sure which technology they are going to go for at any point in time…
"keeping a IT system upto date cost big amounts of capex driving fast pace kit replacements."
You've just given some of the reasons why I don't worry about competition for BT. BT's billing platforms have been evolving over many years, with many of them being retired with the PSTN switch off. The wholesale side is well established and I assume works well, especially when you look at the scale of BT. Companies like Talk Talk, Sky, etc have access to their own customer connections, with BT having more the 10 years experience of offering such service.
VMO2 have never offered a wholesale service, so to enter that market they'll have to heavily invest in the systems to mimic BT's, as would CityFibre and any other provider with wholesale ambitions. The Altnets lack the scale to compete on price with BT/Openreach, and arguably VMO2, so they rely on Ofcom straightjacketing BT. As Ofcom loosens the controls on BT and true competition is unleashed, BT will really come into its own. Since BT are forecasting £2 Billion annual cost savings from 2025 onwards, the competition will always struggle to compete with BT on price.
Current trend only on this one, clearly downwards and unloved, im no teleco techie, but keeping a IT system upto date cost big amounts of capex driving fast pace kit replacements. Needs to earn big to cover that.
Anyway, off to Pembrokeshire for a long weekend soon, gotta get the motor packed.
"i think this one is sadly not good value just at the moment, will reconsider if it gets closer to the 130 area."
You say that BT isn't good value, but what metric do you base that conclusion on? P/E ratio, Net Profit,investment costs, something else?
Fleccy, far play to you, do the same myself limited stocks in big amounts. biggest value holding rdsb currently (cant remember figure without logging into Hl), second biggest is Glen with just over 85k shares, then BP, RYA, CEY, LLOY, TGA and a few smaller ones. Pf value, again without logging in, circa 850k.
GL with yours, i hope they all work out. Patience is an investers best friend. Volatility a traders best buddy
Much better to give the full picture when quoting holdings, rather than just edited highlights to make things sound better, but appreciate the clarification on overall position as 'down'.
That may explain some of the absolute positivity.
As already stated, i Do agree on a 'paper' hold not being a loss or a gain until its realised.
Shall keep my eye on BT, but like Toff, i think this one is sadly not good value just at the moment, will reconsider if it gets closer to the 130 area.
GLA
Day, just to add and save you calculator time, overall I've invested over £165,000 in BT shares alone, with similar amounts invested in Lloyds and Vodafone. I do put my money where my mouth is.
Yep. both posts are correct, apart from a typo where I stated "£35,000 of Lloyds shares at 36p", it should have been £25,000 at 36p. The BT purchases at 106p and 112p were top ups, and I am indeed in profit on those two purchases, but overall my break even is 196p for my BT holdings. I'm not bothered about admitting sitting on paper losses, since I'm sure I'll be in profit at some point.
Just had to remove the filter to get context on Uncle Dougs post and read a few posts either side of it.
Didnt you post this fleccy?
fleccy
Posted in: BT.A
Posts: 6,509
Price: 170.05
No Opinion
RE: Good reply
25 Aug 2021 23:52
"This bb is dominated by Fleccy ramping BT. If you look at his posts and calculate his losses, he definitely should not be giving financial advice"
Show me a post where I've given financial advice, all I've ever done is expressed my opinion and been honest about my investments. You're correct, I am currently down on BT with my break even price around 196p. When the price recently hit 205p I was well in profit, and I'm sure I will be again at some point.
Now you tell us this.
"I get ripped for saying long term holders have nothing to worry about when the price drops; in fact I bought £35,000 of BT split over two trades at 106p and 112p, £35,000 of Lloyds shares at 36p, and I think around £20,000 of Vod shares at 119p. On those purchases I'm currently up on those Lloyds and BT purchases, "
Please advise us how buying in at 106 & 112 gives you an 'underwater' average of 196?
I happen to think your post dated 25 August is the true statement, else why post it.
FWIW i agree whilst holding shares your neither in profit or loss until realised and cashed up.