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I wouldn't underestimate how profitable guarantee and perpetual facility management revenue would be and how attractive it would be for big pension funds. CBRE, JLL, Cushman are just some of massive listed giants that does exactly that as their core business.
Don't have to sell the entire OR stake, just a portion will do as if BT gets a good price it'll immediately provide a tangible valuation to how much OR is worth in the outside market and will instantly boost the SP, it'll also help with reducing debt, deficits and risks.
Further more this is pretty much what BT CEO was thinking:
https://www.thisismoney.co.uk/money/markets/article-8971507/Embattled-BT-boss-Philip-Jansen-hints-sale-stake-Openreach.html
Interestingly parts of the Artical came true:
Analysts have speculated that private equity groups could be interested in buying into Openreach – KKR bought an £890million holding in Italy’s Telecom Italia over the summer.
A City source said: ‘It’s not the biggest surprise to the market that this is being considered.
Drahi, DT or any PE doesn't have to takeover BT to make money. If together they can control over 50% of voting shares then they can control the direction of things e.g. full spin off of openreach into a separate entity and let the market decide how much it's worth (I understand there will be alot of work in regards to asset transfer, accounting, pensions etc... But if there is a will (and £B in in) there is always a way e.g. Alibaba, tencent and all the other Chinese tech listings in US even there is no asset in them).
Your right fleccy that most are fixed rate via bonds and tbh 0.25% is not a deal breaker. It's more the tractory of IR and future refinancing that could be an issue if we see multiple increases as from looking at the maturity dates BT seems to managed to get some sweet deals in the <8 year category but have some high yield long term debt.
There will always be new debt and non-bond components such as overdraft facilities and short term borrowings that it might be impacted immediately though.
Anyhow their price increase should negate most of this if they can continue to provide great connectivity and customer service.
I recall reading somewhere that 80% of BT products are inflation hedged (including equinox) so I think we are ok here vs most businesses. It'll no doubt hurt the debt pile but also will reduce the pension deficit however at this point 0.25% isn't going to derail most investors as everyone knows it'll happen soon or later.
Might be alot of games being played today with options trading at the 1.7 mark but I think alot of momentum into next week esp BT sport decision coming soon.
Can be safe to assume DT and drahi will be locking 30% of stock. What's to say there won't be another party that wouldn't mind taking a slice.
While BT might be hard to takeover but if enough like minded institutional holders buys in they can create similar returns.
FTSE 100 is lagging behind other indicies mainly due to a collection of dinosaur companies and generally pays very high dividends. They also have alot more weighting on banks and financials which has under performed massively in the last 10 years.
Having said that it's probably one of the saver indicies to buy as it has one of the lowest PE ratios globally but don't expect crazy returns like the spy.
I like BT as it's boring as they come but unloved and have growth potential. Making up a huge portion of my weighting now and will continue to do so when I top up my sipp.
If the government genuinely wants UK to level up then it might be wise to at least be open to hear whomever wants to buy BT and give them the chance to justify. Big money is to be made on a full build out of BTs fibre network so why not go for a win win scenario rather than the scare mongering tactics to score a few votes.
I don't mind the SP as it is now so I can top some up on my isa / sipp next year and before their full year earnings release as by then we can let the operational performance do the talking.
The way I see it is that they offer tax breaks for ALL capex projects not just for BT to stimulate the economy.
Equinox is to give permission for LOWER prices.
They have hinted to block any takeover attempt on BT. If they want to help then I would hope they will be allocating a huge portion of their project gigabyte funding to BT.
Off market transactions creates liquidity. There are lots of big holders that cannot offload their stake in normal course of trading as it'll simply take days and most likely tank the share price without the aide of brokerage houses and intermediaries. Sometimes offloading big stakes there will most times be difference to traded price.
I'm clearly as disappointed as everyone else here, not at drahi's no takeover but more so the government indication they will block any takeover attempt but at the same time not helping BT / UK with the urgent support it needs to leveling up it's infrastructure.
He can soak upto 25% before the government steps in. Doesn't seem DT has sold any yet so between them that's 30%.
As mentioned before, it's unlikely drahi can afford a full takeover but if he holds enough voting power perhaps he can set the foundation for a PE buy out which will have deeper pockets and actually enable BT to roll out their fibre plans and see long term value as the market is still too short sighted.
This suddenly got much more interesting.
Judging by the SP i hope it isn't drahi selling out. I hope it's more weak hands trying to exit.
Drahi wouldn't have the financial musscle to engineer a takeover but if he can absorb enough shares then we will benefit anyways.
The private equity in me feels a discovery partnership can reduced the cost based, create synergies and improved EBITDA, and eventually when BT exits they can command a higher exit price. Also upside if HBO opens in UK (which sky might be concern on).
A complete exit via dazn won't be all too bad but seems like negotiation is stalled.
https://rethinkresearch.biz/articles/would-bt-rather-sell-bt-sport-to-discovery-or-dazn-and-whats-sky-thinking/
I don't have subscription to this but either way it's going to be positive.
If I were to pick I would think in the long run it'll be more beneficial to partnered up with discovery.
Thanks for that pokerchips. I wouldn't be surprise if we hit 1.8 tomorrow as the logic and momentum is there.
Who knows but the 1.8 and 2.2 options could both be a strategic investor of sorts and happy to pay at a premium for a higher % of stock.
GL to us holders!
Pokerchips for the options what does it mean 20000 at 1.8? Are they contracts or units, ie how many shares are we talking about, there is also a much bigger parcel at 2.2 mark expiring in December.
If drahi's original purchase price is 1.81 6 months ago, it goes without saying he's expecting SP to have appreciated more than that by now, as far as I can see the company's outlook has gotten better now than before.
Won't see to many shorters that's for sure.
I'm betting Friday would be green. Drahi's average buy in price is probably 1.8ish so we should be seeing these prices soon I hope. Also imminent news of BT sports.
https://www.ft.com/content/33f4b1f5-caad-4687-bb05-4375c3393c93
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https://www.ft.com/content/33f4b1f5-caad-4687-bb05-4375c3393c93
US media group Discovery is in talks over a deal to partner with BT Sport, in a move that would hijack the British television network’s £600m sale to sports streaming service DAZN.
Discovery, which owns the Eurosport channels, has offered to create a joint venture with UK telecoms group BT, in a new effort that would create a powerful participant in British sports broadcasting, according to multiple people familiar with ongoing talks.
BT Sport has the rights to screen English Premier League and Europe’s Champions League football matches in the UK, while Discovery has a long-term deal to screen the Olympic Games across Europe.
BT executives have begun to take the option of a partnership with Discovery more seriously over the past two months, after talks over the outright sale of its sports channels to DAZN, owned by billionaire Sir Leonard Blavatnik, have become stuck over commercial details.
The BT Sport service is tied to the company’s broadband subscribers, which has led DAZN to demand assurances over revenues if they bought the sports channels, people familiar with the talks said. BT, meanwhile, wants to ensure its subscribers will continue to have access to DAZN’s services.
Wrangling over these details has held up the deal. One person briefed on the talks said BT planned to make a decision on whether to sell to DAZN or partner with Discovery by the end of the year.
The Sunday Telegraph first reported on the joint venture talks. BT, Discovery and DAZN declined to comment.
Discovery is also seeking a multibillion-dollar deal to take over WarnerMedia, the group currently owned by AT&T. That move, spearheaded by Discovery’s chief executive, David Zaslav, would create the world’s second-biggest media company behind Disney.
I would seriously consider the discovery deal, there's no hbo max in UK yet I think, could be a bigger partnership than just BT sport's, although that might upset sky.
Should be a strong opening on Monday, either way seems like some goodies before Xmas.
Artical says that 'The competing discussions are reaching a crescendo, with senior BT figures said to be keen to reach a decision one way or the other before Christmas.'
It is understood that Discovery, which owns Eurosport and rights to the Olympic Games, is discussing a joint venture with BT that would combine their sports broadcasting assets. Over time they would seek to make cost savings and BT would eventually sell out of the joint venture.
Talks between BT and Discovery are said to have accelerated over the past two months as what two auction insiders said was a “chaotic” Dazn bid hit repeated snags.
BT and Dazn, a heavily loss-making international venture sometimes labelled the “Netflix of sport”, are said to have struggled to reach agreement over how the commercial risks of a sale would be shared.
BT, which is being advised by Lazard, is understood to have sought guarantees about the reliability of Dazn’s streaming, amid concerns that blackouts during live coverage might prompt customers who originally subscribed to a combined broadband and BT Sport package to turn to a rival for their internet connection.
The telecoms giant has also sought to make sure Dazn is required to maintain access to crucial sports rights so that customers do not end up paying the same for less coverage, sources said.
Dazn, which is advised by Goldman Sachs, has sought long-term guarantees from BT that would mean it would cover the costs of BT Sport customers cancelling their subscriptions. BT is said to have refused such demands.
A joint venture with Discovery would not give BT as swift and neat an exit as cash from Dazn. However, Discovery, which is in the midst of a $43bn takeover of WarnerMedia that will create the world’s second-largest media company after Disney, may be viewed as the more attractive partner in other ways.