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Fleccy, Not to mention the £600m UK gov loan they received and probably will avoid all possibilities to pay back. Plus the furlough money they received (nothing wrong with that as it’s people’s lives) but BT took none!
"but... the SP here (and in Glaxo and Shell etc) is based on the PERFORMANCE of the assets ..and at present (with current economy issues etc) "
The P/E doesn't support your "PERFORMANCE of the assets" view, since BT is clearly undervalued, and as far as your "at present (with current economy issues etc) " view, how do you explain the share price performance of companies like Ryanair?
The market is punishing Telecom stocks for no apparent reason, apart from a constructed narrative around return on future investment. What the market doesn't seem to get, is that the 5G and FTTP upgrades will be the last for generations; There'll be some evolution as far as data rates are concerned, but I can't see any substantial future upgrades from here. Fibre can cope with Terabit data rates, so OLT/ONT replacement will take care of any future increases in access network data rates. 5G will take care of any mobile bandwidth requirements, and 6G will be like WiFi for stadiums, Train stations, Airports, Shopping Centres, etc, since 6G will have limited line of sight uses due to the Frequencies used, complimenting 5G not replacing it.
The reason I mentioned Ryanair is because their share price is back at Pre-Pandemic levels, even though they've seen Billions in cash burn, issued shares, and suffered losses. Ryanair has also committed to purchase at least 200 737 Max "Gamechanger" Aircraft, which would cost around $24 Billion at list price, probably around half that with bulk discount. Using your reasoning, how do you explain anomalies like Ryanair? Seems to me that the market makes assumptions on flawed reasoning and herd mentality, the 2008 Financial crisis proves that. Anyone who says that that markets and stocks aren't manipulated should watch the film The Big Short, where investment banks and credit rating agencies conspired to conceal the risks, and prop up prices of the investments in an attempt to reduce their own losses; Nothing's changed since then, the House still plays with stacked decks.
" BT’s share price has rarely been at such low levels. The value of its assets and services has rarely been so high"
I agree LarryBling...
but... the SP here (and in Glaxo and Shell etc) is based on the PERFORMANCE of the assets ..and at present (with current economy issues etc) the City is using a carrot and stick approach in all 3 behemoths to demand better performance but reward certain achievements ...behemoths have a lot of stakeholders and The City demands a lot from the BODs who are given the responsibility towards those assets and their performance...
I like the carrot and stick approach as a mid-term investor ..... mid-term these companies should be in great shape for the challenges of the mid 2020's
IMO
Thanks Larry. Yes I agree Drahi's interest raises interesting questions for the government. For some time BT has been treated as a political football by the government with generally a 'hinder/beat up in front of the public' mentality rather than 'help them to help the UK'. Perhaps foreign interest will shift this mindset and lead to greater respect and support.
I absolutely agree with you that in logical terms BT is worth greater than £3.50, however logic has seemed irrelevant in recent times.
Personally I wish Drahi would just get on and make his move, not sure he needed to make a statement that constrained him for a period but perhaps part of a 'softly softly' strategy.
I have no desire or need to cash out and probably still wouldn't 'get off my ass' and sell at £3.50 and above but it would be nice for SP to be up there and be looking at a more exciting number.
Pete, the question gets more difficult, the more of BT shares that are hoovered up by Drahi. HMG want fibre success ASAP, they may even harp on about it in an up coming manifesto, but is a BT/Openreach in foreign hands a security risk? I guess just OR would have a better chance of being bought up.
The board are not going to sell BT for anything less than 350p+ (I think) but surely OR on its own is worthy of £30b.
My belief is that BT’s sum of its parts are worth much much more than 350p. What do you think?
I've forgiven you for that Rodney shaking image Larry. What do you see as particular challenges for 'board and ministers' in the coming year?
The big paragraph from this piece is,
Covid has shown why we need strong connectivity. BT’s share price has rarely been at such low levels. The value of its assets and services has rarely been so high. The coming year could bring challenges for the board, and ministers.
The country/market needs to recognise this, as most on here do!
Cont.....
You could see this as a far more serious version of McDonald’s link-up with Innocent Smoothies in 2007. McDonald’s was pilloried for its cynicism, Innocent for selling its soul, and the trial to sell the fruit drinks with burgers was ditched five years later. But the two sides were free to try. In a free market, freedom and responsibility are two things not to be stubbed out lightly.
Cont......
So the clouds have largely cleared since Philip Jansen became chief executive in February 2019. Yet despite a rally since last autumn, the battered shares are trading at 174.7p, down a quarter since Jansen joined. BT is vulnerable to a takeover and may become more so when chairman Jan du Plessis leaves in October or November.
Drahi, 57, is understood to have made it clear in conversations with industry figures that he wants to play a big role in BT’s future. His presence has also stoked pre-existing interest in BT from a wide range of private equity firms. Altice’s stakebuilding is highly likely to catalyse corporate activity in the next year or so.
Business secretary Kwasi Kwarteng likes to say he is “monitoring” contentious situations involving the likes of Glaxo Smith Kline — usually code for doing nothing. In most cases, he is right to sit on his hands. But in the event of a BT takeover, the government would be expected to take a careful look. BT is to all intents and purposes already foreign-owned — after Drahi, the biggest investor is Deutsche Telekom, whose 12 per cent stake is a legacy of BT’s EE purchase. (Many of its other 795,000 shareholders are retail due to its 1984 privatisation.)
The Germans take a different view on the national importance of telecoms infrastructure: the state owns 31.9 per cent of Deutsche Telekom.
Covid has shown why we need strong connectivity. BT’s share price has rarely been at such low levels. The value of its assets and services has rarely been so high. The coming year could bring challenges for the board, and ministers.
More heat than light over Vectura
One situation Kwarteng should go no further than “monitoring” is the £927 million purchase of Vectura by Philip Morris International (PMI). Vectura, based in Wiltshire, produces inhalers to treat respiratory conditions often exacerbated by smoking. PMI shipped 628.5 billion cigarettes last year. It’s not hard to see why the mooted deal has sparked outrage; it’s a bit like a weapons maker going into hospitals.
You might not like the deal, and you might think PMI’s mission to be a “healthcare and wellness” company is risible, but the government has no place deciding whether or not an acquisition should go ahead on ethical or social grounds. And campaign groups and charities are entitled to their views, but this is ultimately a decision for the boards and shareholders. If PMI thinks it can own Vectura without destroying value through the huge backlash, and Vectura thinks the 150p-a-share offer is in the best interests of investors, they should go ahead. There is still a chance that buyout firm Carlyle, which had previously tabled 136p a share, could come back with a higher offer.
You could see this as a far more serious version of McDonald’s link-up with Innocent Smoothies in 2007. McDonald’s was pilloried for its cynicism, Innocent for selling its soul, and the trial to sell the fruit drinks with burgers was ditched five ye
ogether has no limits” is an offence to the English language, but Patrick Drahi’s corporate slogan might be pertinent when it comes to BT. The French-Israeli tycoon popped up on its share register in June with a 12.1 per cent stake. At the time, Drahi said he did not intend to make a takeover offer — a promise that bound his hands for six months.
Yet few expect the stakebuilding to be the limit of his ambitions; Drahi is likely to come back for more after his bid moratorium expires in December. In the meantime, his presence has stirred up private equity interest in BT and its Openreach broadband subsidiary. One of the most important infrastructure assets in Britain is very nearly in play — and Drahi, billionaire founder of the European-focused telecoms group Altice, looks set to take a key role.
The London market is in the grip of an M&A boom. Buyout firms have struck 13 public-to-private deals so far this year with a total value of almost $31 billion (£22 billion), according to data firm Dealogic — the highest number since 2007. Many of the companies being bought — supermarket chain Morrisons, the property developer St Modwen — are the kinds of stocks the market has come to undervalue. They have solid asset backing and cashflows, but they are in mature industries and might have unexciting growth prospects or a need for long-term investment.
BT fits squarely into this category. Having shaken off the sins of the past, when it made costly and distracting investments in sport and fell foul of an accounting scandal in Italy, it is planning to spend £15 billion rolling out the fastest “full fibre” broadband to 25 million premises by 2026. A positive ruling by regulator Ofcom in March on the returns that Openreach and others would be able to make from full fibre unleashed a wave of energy in the sector. A pledge by Virgin Media O2 to upgrade more than 14 million properties over the next seven years hit BT’s share price last week and highlighted the hotter competition.
The 20-year Openreach project is the kind of investment that might appeal to less racy “core” buyout funds run by the likes of Blackstone and KKR. It obviously appeals to Drahi, who has extensive experience of building fibre in Europe and views BT as the likeliest winner in Britain’s ultrafast internet market.
The biggest obstacle to a takeover in the past was BT’s deficit-laden pension fund, which made the company look like a retirement scheme with a telecoms group attached. The results of a triennial review in May put the pension problem into a more favourable perspective, with the deficit shrinking from £11.3 billion in 2017 to £8 billion last year. BT and the trustees agreed a repair plan including £2 billion secured against the shares of EE, BT’s mobile phone business.
https://www.thetimes.co.uk/article/a-takeover-bid-for-battered-bt-is-only-a-matter-of-time-3bzlt8d92
Can anyone post to entire article here? Thanks in advance...
I guess given Drahi has met the board plus talks with Jansen several times, met the CWU and HMG it may be a given he’s talked with DT to see what his options are.
More interesting would be what would Deutsche Telekom do if a bid did happen just sit back or make there own move?
Let's hope this latest article helps the share price this week.
‘Together has no limits” is an offence to the English language, but Patrick Drahi’s corporate slogan might be pertinent when it comes to BT. The French-Israeli tycoon popped up on its share register in June with a 12.1 per cent stake. At the time, Drahi said he did not intend to make a takeover offer — a promise that bound his hands for six months.
Yet few expect the stakebuilding to be the limit of his ambitions; Drahi is likely to come back for more after his bid moratorium expires in December. In the meantime, his presence has stirred up private equity interest in BT and its Openreach broadband subsidiary. One of the most important infrastructure assets in Britain is very nearly in play —
https://www.thetimes.co.uk/article/a-takeover-bid-for-battered-bt-is-only-a-matter-of-time-3bzlt8d92