The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
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"BT and Toshiba first announced their commitment to creating a trial network in October 2021. Although the official launch date of the trial with EY has just been announced, the network has been running since early April 2022 and will operate for an initial period of up to three years."
https://www.computerweekly.com/news/252516398/BT-Toshiba-team-on-first-commercial-trial-of-quantum-secured-network-with-EY
This technology will interest Financial services companies, Government agencies, and any company involved in sensitive research and development. It's possible this will generate a lot of revenue for BT, until other's move into the same space. I assume BT have a head start, within the UK on this.
The latest announcement about BT splitting its activities makes absolute sense. EE for the plebs and BT for the rest. That way the group can concentrate on its core activities and sell off the network and its maintenance (i.e. Openreach). This would be a win-win for everyone - customers, shareholders , pension fund, government, Drahi and competitors. A single, all-digital network for the entire UK, run from 30 mega exchanges.
Fleccy. The figures relate to the formal review in 2020 ( next due 2023 ) so one has to assume that they are estimates based on the actual deficit.
GLA…
casapinos
well maybe Drahi would be better spending his time trying to get a meeting with Putin as that may well help the BT share price more than anything else ....
Poker... I don't believe Drahi has spent £3.5 bill buying a position in BT to watch the SP drift slowly down as it has for the last five years........
" to alleviate the pressures of two major holders "
but Drahi supports the BOD and the plans for the next 2 years so I am not so convinced he is putting any undue pressure
He has enough on his plate with his other businesses and the debts Altice are carrying so the pressure is more that he doesnt have to sell shares to support Altice problems... ..if anything..IMO
No , Bt won’t break up, for a few years yet
Are we seeing the build up to a break up of bt ?????
Yep Fleccy you Nige I think, mentioned the £4b deficit a few times last year, seems to have some official credibility now, be interesting if BT will give further update in May based on current metrics outside the triennial review.
CityFibre has been going since 2011 in its current guise, so they’ve had 11 odd years to steal a march on OR or VMO2, on building fibre and on accumulating a fit for purpose workforce.
"That is from £7978 million down to £4050 million. This was down to payments by BT and better returns from the schemes assets."
Good news. I wonder if they're talking about the actuarial deficit, or the IAS 19 deficit. The IAS 19 deficit has always been the lower of the two, does it say on the letter?
Once the pension goes into surplus, the trustees want to arrange an insurance buyout.
For those interested, the latest info on the pension deficit, received today in post. 30 June 2020 the fund was estimated to be 88% funded, assessment on 30 June 2021 the estimate had risen to 93%. That is from £7978 million down to £4050 million. This was down to payments by BT and better returns from the schemes assets.
All looking good, another nail in the coffin of those using the pension to bash BT…
"Openreach and VMO2 are overbuilding and undermining competition – says CityFibre CEO"
https://www.mobileeurope.co.uk/openreach-and-vmo2-are-overbuilding-and-undermining-competition-says-cityfibre-ceo/
"If BT feel they need to be seen to be doing something to alleviate the pressures of two major holders, then such a break up provides management with a plan, spins off a long-term winner in Openreach and creates an entity which can generate cash for the fibre build-out ."
They may well eventually IPO Openreach, I just don't see it until the FTTP rollout is completed, and BTPS is in good enough order for a pension buyout by the trustees.
Fleccy . You will no doubt know a lot more than me about the internal workings of BT but what occurs to me is that, as well as being seen as a "hidden gem " Openreach is going to be consuming a very significant part of BT''s spend over the next few years, whereas ...(I guess)EE and consumer is much less cash hungry and generates significant revenues in its own right (£4.8 in the last figs).
If BT feel they need to be seen to be doing something to alleviate the pressures of two major holders, then such a break up provides management with a plan, spins off a long-term winner in Openreach and creates an entity which can generate cash for the fibre build-out .
I am sure there is a school of thought which is pressing a view that "the components are worth more separately than the whole is currently valued at"
"Am I overthinking in wondering whether a breakup is coming??"
EE was already in consumer, so all they're planning to do is put the whole consumer product range under the EE brand. It looks as though they're going to start pushing more converged products, like unbreakable broadband, maybe 4G/5G broadband routers in rural locations where FTTP is a long way away, we can only guess. I think it makes sense, Openreach will be the local loop, with EE their customer for consumer products. No doubt we'll get a lot more detail over the next 6 months.
Can someone clarify for me please, if EE is taking over BT consumer (or BT consumer being rebranded as EE?), does that mean EE is what will be on the bill for BT's 'home fixed phone' customers (i.e. what do BT consumer sell now)?
Thoughts
BT is under pressure from Drahi , who now holds 18%,
Persistent rumours that a spin off of Openreach could be worth "up to "£20 billion"
BT recently did a deal which puts their pension deficits in a box to be funded by Their EE subsidiary.
Bt announce that it will use the EE brand for consumer but enterprise and global will remain as BT.
Am I overthinking in wondering whether a breakup is coming??
https://www.mobilenewscwp.co.uk/News/article/bt-adopts-ee-create-flagship-brand-consumers
"CEO of BT Consumer Marc Allera revealed the news in a blog post and told readers that nothing will change for BT customers, and that BT will be the flagship brand for Enterprise and Global units.
He says BT customers believe EE offers the best mobile connectivity and that it is steadily gaining popularity in the broadband market.
Allera said: “Having both BT and EE in an already crowded consumer market means we must have two of everything, and that makes life harder for our customers and our people.
“Two accounts, two apps, two product roadmaps, and multiple systems- we need to simplify things, for everyone.
“While EE’s rural mobile coverage spreads further than any other operator, EE is also favoured by customers in our towns and cities – which is where there is an overwhelming demand for multiple services beyond fixed lines.”
More details will be shared over the coming months."
BT’s Consumer Division is to be wound up and merged with EE to make one company under EE leadership and with EE branding.
People are over thinking this here.
BT’s not just line rentals (an essential services) broadband (increasingly so) BT sport and EE (quad play creating a robust quad play structure).
They offer new site services, Ethernet circuits to all businesses, are completing fibre cities and MDU programmes, repayments projects, and that’s just openreach.
Their portfolio is huge and a not all revenues are coming from residential rentals.
This type of stock is defensive and tends to do well when the market is struggling.
LoppUp is up 100% today - one of the reasons is that Telefónica is deploying the Hybridium solution at 'Universitas', its global innovation and talent hub, located at its Madrid HQ
"Universitas is at the heart of our objective to turn Telefónica's headquarters into a complete and avant-garde technological, disruptive, training and creative ecosystem, and we are delighted to partner with Hybridium in this endeavour. Hybrid classes will leverage Hybridium's technology, combining virtual and face-to-face sessions in groundbreaking formats that honour the essence of the Hub in attracting, fostering and nurturing talent. We see Universitas and its technologies as a world reference."
https://hybridium.com/
Telefónica never stand still ..... never
the pressure is also there in terms of grabbing new business contracts and maintaining International revenues too.....all under pressure everywhere at the moment .... I dont think the sector can afford any price wars to try and snatch each others customers ..that would be self defeating IMO
I think the fears on all the consumer cost cutting will be overdone myself.... they give this impression that no one can afford anything....
I would guess people would cut Disney+, HBO+, Nat Geographic + and all that kind of stuff before dumping Netflix...especially if the password is shared anyway !!!
Potentially cost of living pressures could suppress all shares in ‘luxury providers’ but not sure too much of what BT does is considered luxury now.
Not sure if there will be an increase in churn of broadband. All providers will be ‘cost challenged’ right now and if they’re smart will look to avoid a self-destructive race to the bottom. Most people will probably take the meat out of their sandwich before turning off broadband.
Pressures may encourage some to move to having just mobile broadband rather than fixed as well and if the likes of Netflix are seeking a downturn that may suggest less reason and demand for fixed.
Similarly, possibly people out of contract will be turning off BT sport, particularly as football season draws to close.
I suspect BT being sold down on the back of an expected reduction in existing customer add ons (bt sport, switching broadband provider etc etc) - people now looking to cut back and these sorts of things must be in the firing line - thoughts anyone?