(Adds analysts reaction, banking source)
LONDON, May 15 (Reuters) - Shares in BT rose as much
9% on Friday from decade lows after the Financial Times said
Britain's biggest broadband operator was in talks to sell a
stake in its Openreach networks unit.
The report said potential buyers had held talks with BT in
the last three weeks and that the talks were in an early stage
and the structure of any investment remained under discussion.
Openreach, a wholly owned subsidiary of BT, operates
Britain's nationwide broadband network. BT and rivals such as
Sky TalkTalk use its lines to provide
broadband to their customers.
The FT said potential buyers of a stake included Australian
investment firm Macquarie and an unnamed sovereign wealth fund.
However, a source close to Macquarie told Reuters the investment
firm had not expressed an interest in buying a stake and was not
in talks with BT.
BT declined to comment on the report. Analysts at Jefferies
valued Openreach at 23 billion pounds ($28 billion), saying that
was towards the top of an analyst range of between 12 billion
pounds and 25 billion pounds.
A banking source familiar with the matter said BT was in no
rush to do a deal and no mandate had been issued to sell a stake
in Openreach.
Openreach is the most profitable business within BT,
producing core earnings of 2.86 billion pounds in its last
financial year.
BT has set an ambitious target to build fibre broadband
connections to 20 million premises by the late 2020s, a
programme it estimates will cost 12 billion pounds ($15
billion).
The company suspended its dividend last week to bolster its
balance sheet for the economic downturn already starting to
emerge from the coronavirus pandemic and to help fund investment
in its broadband and 5G mobile networks.
Chief Executive Philip Jansen said last Thursday that
despite the economic uncertainty, a surge in the use of mobile
phones and data caused by the pandemic had made the network
upgrade "a matter of extreme urgency".
A 2 million pound share purchase by Jansen on Wednesday also
indicated that substantial talks had not started because such a
transaction would break insider trading rules if a material deal
were being negotiated.
Analysts at Jefferies said: "We wonder how that transaction
could have been authorised if BT were at the same time engaged
in non-public negotiations of such a material nature, even at an
early stage."
BT's current market capitalisation is 10.7 billion pounds.
Its shares, which fell to a 11-year low of 98 pence on
Thursday, gave up some early losses and were trading up 6% at
108 pence at 1000 GMT on Friday.
($1 = 0.8199 pounds)
(Reporting by Paul Sandle and Pamela Barbaglia; editing by Kate
Holton and Susan Fenton)
