Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
BT appearing on the daily FT blog this morning. Apparent reasons for fall were that Berenberg had reported that they expected a divi cut;
'BT’s normalised free cash flow of almost £2.5bn is c£1bn
higher than its dividend cost of £1.5bn. From this £1bn, BT has to support
the pension deficit, buy spectrum, buy back employee share options to
prevent dilution, and fund restructuring. If new CEO Philip Jansen wants
to increase investment to drive a return to growth, this would shrink the
£1bn of headroom for such costs, putting the dividend under pressure. We
thus see May’s full-year results as a risk and downgrade to Hold.'
Mr Jansen will reveal his strategy at May’s results. We believe he will outline a pro-investment, pro-growth vision and repair
political and regulatory relations at the start of his tenure. We do not think
BT has the cash flow to be able to do this without risk to the dividend. The
board has committed to 15.4p dividend in 2018/19 and 2019/20. We believe
that Mr Jansen may signal that, given the strategic importance and growth created by fibre-to-the-premise (FTTP), he will prioritise investment and signal a cut to the dividend from 2020/21. We forecast a 30% cut to 10.8p.
It looks like BT is engaged in yet another selling off of family silver. Ater the announcement of the sale of BT Fleet last week. This time the Financial Times is reporting is the intentionto reduce the size of Global Services by reducing it's customer base from 5200 to 800!
Perhaps thinning down to reduce overlap with DT?
Extract here;
BT’s international business is intending to shed more than 80 per cent of its customers as part of its attempts to move on from a significant accounting scandal uncovered at BT Italia in 2016.
Bas Burger, a Dutch industry veteran who was promoted to run Global Services in May last year in the wake of the scandal, plans to radically slim down the business, selling off its array of local networks and reducing its customer base from 5,200 companies to the 800 biggest and most profitable.
“We will become a smaller company, leaner and partnership-driven,” Mr Burger said. The business has had to change its focus from providing a range of outsourced telecoms to cloud computing services, he added. The new strategy reflected a change in customer needs, Mr Burger said.
Large companies once outsourced everything from desktop telephones to broadband access; now, they develop their own apps or use cloud-based services. “It’s about delivering the availability of those apps. We are not building them, developing them or even coding them. The differentiator will be that we are everywhere in the world,” he said. Mr Burger said that he expected the shift to be complete within three to five years. About 70 per cent of Global Services’ revenue base is either not growing or in decline, and Mr Burger said sales growth was “less of a topic” compared with a promise to double returns within two years. In the first half of this year, revenue fell 7 per cent to £2.3bn while earnings before interest, taxation, depreciation and amortisation surged 35 per cent to £208m.
Mr Burger said he had been shocked by the Italian scandal and has led a process to improve controls across BT’s international operations. “We need to triple- and quadruple-check to minimise the chances of that happening again,” he said, although he added that there had not been much of a backlash from customers in response to the scandal, which emerged after a whistleblower contacted senior BT managers with a series of claims about how BT Italia’s accounts were being prepared.
Thanks guys - usually something like this spreads like a rash on the online news platforms.
I'm not sure this is hinting on openreach separation - I don't see how they would change if openreach was independent.
Separation of Openreach would still be a major exercise and might be a good idea from a shareholders point of view because it would see an immediate hike in the share price but from BT's point of view (Openreach and rest of BT) it would be a disaster and I wouldn't want to hold shares once the initial euphoria of a sale or separation being announced.
I remember the last time BT was in trouble the finance press and shareholders more or less forced BT to sell off O2 which anyone could see was a dumb move for a telecoms company to lose its mobile operations.
There is still an awful lot of work to do in separating out OR from Rest of BT. For one thing ROB owns all the assets and the IT systems (I assume) are still closely inter-connected. The cost and disruption to Telecoms would be immense.
In terms of what Ofcom are trying to do. With all the parties who've declared an interest in setting up their own networks I would have thought regulation should be slacking off rather than getting tighter. BT is actually now at a disadvantage in that they have to maintain the infrastructure and what happens when ducts/poles get full - does BT have to supply an alternative, and who pays for it. Openreach is a commercial company and has to make a profit, Ofcom has to take into account ALL the costs of OR including pension commitments and allow them to make a reasonable profit on any new encumbrances, such as dark fibre, they want to place on them.
Hi - Long term lurker here but not posted on this SP previously.
I've probably missed it but I wasn't aware that FUM were going to make an open offer to all shareholders to in effect enable them to buy 10 shares for every 85 they own at 7p per share and bid for further shares at 7p.
Not sure whether to take this up, I think the product has massive potential but I'm not sure this company will manage this through to market given their previous failures.
However my main point is that if they have all the money they need from the original offer why are they extending this to all shareholders - was this something planned from the start - I can't find in the RNS's anything that indicates this.
Hi - Long term lurker here but not posted on this SP previously.
I've probably missed it but I wasn't aware that FUM were going to make an open offer to all shareholders to in effect to enable them to buy 10 shares for every 85 they own at 7p per share and bid for further shares at 7p.
Not sure whether to take this up, I think the product has massive potential but I'm not sure this company will manage this through to market given their previous failures.
However my main point is that if they have all the money they need from the original offer why are they extending this to all shareholders - was this something planned from the start - I can't find in the RNS's anything that indicates this.
The Financial times markets review is saying that they think the drop yesterday is due to Du Plessis scotching the rumour that Openreach would be spun out.
Apart from that American company who thought this was a good reason to buy BT on the chance that this would be a possibility who else really thought this was likely.
Rather a lot of people apparently - moving down as markets open.
Du Plessis has always said that GP had the right plan but was the wrong man to implement it and that he wouldn't want a new CEO to change it.
However I've never known a new boss come in and say 'Everything here looks fine - I'll leave well alone'. Its not in their nature.
FT was saying this morning that yesterday's rise was due to;
"An announcement from rival network builder CityFibre that it would roll out to 5m homes was seen as lessening Ofcom regulatory pressure on Openreach".
Just goes to show that you can spin news any way you want to fit the facts.
Also saw mention this morning from Barclays;
"An outsider in our view would be more likely to make significant changes to the balance sheet/dividend policy and company strategy, with our research indicating full separation of networks from retail operations would hinder the disruptive rollout of Alternative Fibre operators (although not in itself create value)."
You pays your money and take your chances in this game but why the market should rise when Jansens been in the frame for some time and then the SP drops 5% when its officially announced is beyond me.
BT has always produced a quarterly report but at the last review of the annual finances I believe GP said that they would only have a full meeting with the press every 6 months.
BT seems to have made it harder to find their historical reports - I can find a site that gives you each annual report but they used to have all the last year or two reports including quarterly in one place.
However I found this for the first quarter;
https://www.btplc.com/Sharesandperformance/Quarterlyresults/2018-2019/Q1/Downloads/Newsrelease/q118-release.pdf
BT's strategy (which du Plessis has said will not change) was outlined by Patterson in May
· Our Strategy will deliver sustainable growth in value by focusing on delivering differentiated customer experiences, investing in integrated network leadership, and transforming BT's operating model
· BT's scale and market position mean that it is uniquely positioned to drive network, product and service convergence across consumer and business markets
· Actions being taken include:
- Launching new converged product offerings to deliver differentiated customer experiences, support customer loyalty and improve economic returns;
- Further improving customer experience by increasing FTTP and mobile infrastructure investment within an annual capex allocation of around £3.7bn;
- Transforming BT's operating model and driving productivity improvements in core UK operations;
- Accelerating the restructuring and transformation of Global Services by introducing new digital products with a greater focus on our top global customers, reducing capital intensity, and significantly lowering costs;
- Focusing on around 30 modern, strategic sites to create a more collaborative, open and customer focused working culture, including plans to exit BT's headquarters in Central London;
- A three year reduction of c.13,000 mainly back office and middle management roles;
- A year 3 cash cost reduction of £1.5 billion with costs to achieve of £800 million and two year payback;
- Cost reductions to help offset near term cost and revenue pressures, provide capacity to invest in value enhancing projects and drive longer term profit growth;
- Hiring c.6,000 new employees to support network deployment and customer service.
BT Group today announced an evolution of its strategy to drive sustainable long term growth in value for shareholders by maintaining its leading position in converged connectivity and services in the UK and for multi-national corporations. The strategy is clearly focused on:
· Delivering differentiated customer experiences;
· Investing in integrated network leadership; and
· Transforming BT's operating model.
Reuters release;
https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/BT.A/13635595.html
No doubt the young things you've seen out and about are part of the 6,000 but I would have hoped a few old lags would be with them to show them the ropes.
Also see Marc Allera's vision (which I won't copy out) of a converged network;
https://uk.reuters.com/article/uk-bt-strategy/bt-fights-back-with-new-consumer-strategy-idUKKCN1IH1B1
If we're playing guess the issue in January/February I would have hoped the issue of next CEO would be resolved. I don't expect it to drag into the next (calendar) year.
I would have thought the big issue is whether we have a transition agreement with the EU and the outline of the final deal (or no deal). Without it we are going to have a big hit across the stock market on the arrangements for crossing over to wto rules. With it, the can will be kicked down the road for another year or two. I'm guessing there will be one almighty fudge on NI so we can get a little grace to prepare for a Canada style FTA with a few concessions on things like Euratom and Galileo unless there is one almight shifting of red lines.
Take this with as much of a pinch of salt according to your tase but the ISP Review is saying that there is a report out by Plimsoll Publishing - a financial analysis company that is warning that Internet Service Providers (ISP) are one of the top 10 UK industries identified as being “under threat” and “most at risk” from Brexit, particularly a “No Deal” Brexit outcome.
There's no detail in this since the ISP Review can't afford the £600 necessary to purchase the report and I haven't seen this reported anywhere else;-). Personally I can't understand why ISP's should be particularly affected unless they have strong European connections (like BT and Vodafone??),
https://www.ispreview.co.uk/index.php/2018/08/new-analysis-warns-uk-internet-service-providers-at-risk-from-brexit.html
The last para is my viewpoint. its not a sentiment you'd see from Winnifrith.
I note that Tom Winnifrith (of ShareProphets) has cast his baleful glance over Versarien and come up negative.
I don't pay for access but can't see the whole thing but the first para sets the tone;
'I’ve been following darling of the bulletin boards, Versarien (VRS) for some time finding the ever-increasing share price more and more incredulous. I thought I would use today’s results to take a closer look and come up with a considered valuation. In short, this appears to be the in the top 5 most overvalued shares on AIM – get out while the going’s good!'
Before anybody says it I'm not trying to deramp the share. It's currently my second largest holding and I think the potential value of this is immense even if on paper and current earnings it seems to be over-valued.
The boss of O2, Mark Evans, is demanding BT should open up its mobile network to other operators in the same way as it is forced to for broadband even threatening to take them to court.
I hope Patterson/Du Plessis tell them, or Ofcom where to go if they try this on.
The excuses for claiming the BT broadband network is a monopoly which must be regulated does not and should not apply to the wireless network which was built/acquired after privatisation.
Source here;
http://www.dailymail.co.uk/money/news/article-5877727/Help-speed-Britains-mobiles-O2-chief-sends-powerful-message-BT-bosses.html
This times it at 3:45. https://www.reuters.com/article/bt-group-ratings/sp-cuts-bt-groups-credit-rating-idUSL4N1TE569
Good old Sharon; 'June 12 (Reuters) - S&P Global Ratings on Tuesday cut its credit rating on BT Group, citing strict oversight by British telecom regulator of its broadband networks. BT's Openreach network has come under the scrutiny of Ofcom, which said in March it would cap the amount the network can charge rivals to use its entry-level superfast broadband service. The downgrade to 'BBB' from 'BBB+' was also due to increased competition in the consumer broadband market and Brexit-related uncertainties, S&P said in a statement. It, however, kept a stable outlook. (https://bit.ly/2l6qJfn)' It doesn't rain but it Poors - I'll get my coat...
Pace - I know you're not the kind of person to make stuff up but I find this rather difficult to understand. I can believe that BT would do what they did with offices and sell them off to be rented back but that exchanges to close will make no sense whatsoever. As you imply where is the hardware to be moved - it's much the same as the rumour of the sale of mobile masts - talk about selling off the family jewels!!!
Times is reporting that BT has rejected the offers. 'BT is understood to have rebuffed recent offers for its Openreach business, after receiving interest from private equity and infrastructure investors interested in buying the phone and broadband cable network.'