Citi downgrades BT from 'buy' to 'neutral', highlights risks in telco scene

Citi reduced its rating for BT from 'buy' to 'neutral,' citing risks from a shifting regulatory scene.Analysts downgraded their rating for the telco even as they numped up their target price from £4.50 to £4.85.In a note, Citi analysts said the revision of their estimates for BT were based on the acquisition of EE for £12.5bn, and harsher-than-expected Ofcom proposals on ethernet price controls.Analysts said the next 12 months would see a high level of regulatory activity in UK telecoms."While we expect BT to ultimately get through with the EE deal closed and Openreach still attached, we believe that investors may be underestimating the potential impact of Ofcom's Strategic Review," Citi said in a note.Citi said Ofcom's desire to avoid re-monopolisation could mean more radical changes than the market expects.Analysts increased their 2016 revenue forecast by 7.5% and lifted their earnings estimate, excluding EE, to £6.28bn.Shares in BT fell 0.98% to 449.45p on Monday at 09:03.