Bernstein downgrades BT on TV and competition fears

Broker Bernstein has downgraded UK telecoms group BT, saying it may over-spend on TV sports rights and face more competition from rival Virgin Media.Bernstein, which reduced BT to 'market-perform' with a fair value of 385p, said "much good can be said" about BT and its investment case, although a good deal of that was well-understood and priced into its shares.The broker said there were four potentially big risks on the horizon that could limit a rise in the stock.BT, which has launched two sport channels to compete with arch-rival BSkyB, could overspend on programming, particularly at the next auction of rights to show Premier League soccer.Bernstein also said BT could face a renewed competitive challenge from rivals, particularly Virgin which has embarked on a cost-cutting drive, if the "triple-play" broadband, fixed line and TV market fails to expand as much as expected.Other risks included a less favourable regulatory regime for fibre networks and a bigger-than-expected increase in the company's pension deficit.Bernstein said: "None of these risks are necessarily imminent, but all are potentially significant, so we find it hard to find a compelling higher valuation."Shares in BT held their own against the news, rising 4.4p or 1.2% to 366.3p at 10:12 in London.PW