Member Info for EMMJANE

Working from home will massively help bt global services division as companies install higher security ie data loss prevention, encryption, access to cloud services and information risk management into their employees homes.

This is a perfect growing business going forward for bt global services.

Also Look at the inflation Busting rises being put into New contracts that have recently been agreed to show that there is inflation coming down the road in broadband connectivity and justified from all the extra data growth.

Plus all the new upgrades and new connections that are being installed, will give bt a 12 per cent return on that investment.

The future is bright imho for this company and nearer we get to dividend reinstatement the bigger the field of investors and if that dividend is 7.7p with future growth that is 7 per cent at current sp, with growth added to it as bt investment starts seeing the returns.

I think this share is now cyclicallly / technically ready to continue it’s up move to test all moving avges on upside.

Takeover rumours /hard brexit and probability factors of takeover / pension deficit all now priced in the price imho

However what is not priced in bt that I think has major effect, is there is signs of service and goods inflation, but wage inflation will be subdued going fwd due to mass unemployment increase.

Clearly central banks will keep rates low for long while no matter if service and goods inflation comes about.

But this scenario is perfect storm for by profit as operating cost reductions achieved, price of service and margin is allowed to increase, whilst debt has low interest rates to serve.

It also allows the pension portfolio to perform as well.

Dividend will resume in just over a year and bring back yield /income hunters / investors

I truly believe this is start now Of the upward trend.

Put them in a Isa

pressure from Boris Johnson’s government for the telecoms industry to accelerate delivery of “gigabit” broadband speeds to all premises by 2025, BT is investing £12 billion extending Openreach’s full-fibre network to 20 million addresses by the mid to late 2020s.

To help to pay for the investment, BT has suspended its dividend until 2021-22, saving £3.3 billion, and is spending £1.3 billion as part of a modernisation programme to deliver savings of £2 billion over five years.

The reports of a potential stake sale in Openreach this year attached a valuation of about £20 billion on the division and analysts value Openreach at significantly more than BT’s present market capitalisation of £10.1 billion. BT’s sum-of-the-parts valuation is 228p, according to analysts at Credit Suisse, and it trades on a forward earnings ratio of about 5.8 times.

That’s why board are scared of a private equity bid as passive funds have driven this sp miles too low and private equity can seize the opportunity

For me it’s simple. The current price is clearly too cheap and the reason it’s got cheap, is declining profits over last few years and no sign of growth. However everything has a price and even with the lack of growth for last few years, the board are steadying the ship and investing in the infrastructure to return company back to growth.

Whilst being on an extremely cheap valuation at their low point right now in profits ie 5 times earnings and even consensus analysts see growth in profit going fwd, let alone what the company can outperform the consensus.

On top of that the mkt is discounting the pension deficit, brexit and any value stocks.

Plus global passive investment Funds which nowadays is where the weight of fund money is. Is creating massive bubbles in winning stocks and massive cheapness in value stocks. That this bubble will burst as mkt funds gone too passive, that it’s all chasing bubble prices as the algorithms are set to chase same things and it’s extremely dangerous and now is time for stock picking funds imho

Of which bt will rally massively as it clearly makes a lot of money and future cash flows after investment and net asset.

Remember past performance doesn’t predict future performance dyor

Fleccy - I’m currently helping a relative transfer out of couple of their small final salary pensions via a financial advisor (that you must have to transfer out)
And the tax benefits are a lot better not in a final salary scheme as pot you leave is basically inheritance tax free upto 75 years old but even then carries lower tax rates than inheritance tax.

But due to a lot of govt bonds being negative in Europe the actual cost to replicate the pension through annuity is 60 times and valuation that company pension funds hold it too

Hence it’s beneficial to deferred member and pension company if transferred out. But of course depends on own financial circumstances as you will be carrying the investment risk going fwd.

But many are seeking transfer outs which will improve bt pension deficit in itself

Additionally a lot of deferred members are currently seeking transfer out valuations, which currently on final salary pension schemes are extremely attractive due to such low govt bond yields and what annuity rates are primarily priced off.

Ie many final salary pension schemes are currently offering 40 times annual pension amount, which is attractive to many as money left also falls outside your inheritance tax estate.

Whereas the pension scheme are carrying these at correct mkt value of 60 times. So as deferred members take the transfer out offer, the company pension fund books a profit on its future obligations

Tbh with a huge pension fund of gbp50/60bln a deficit or surplass of gbp10bln is noise to me as mkt valuations / volatility will change annually by 10 per cent avge even in low risk portfolio. Plus consensus on 30th June valuation is gbp9.1bln, which is throwing kitchen sink at it, so to me more upside to that no.

Bid or no bid.
These shares are a investors paradise at this price for the long term.

Below is analyse consensus on future earnings, which make these shares so so so cheap

https://www.bt.com/about/investors/financial-reporting-and-news/latest-consensus

I agree bricks. The weak longs will profit take on the rally. But see real money coming into this stock over coming days/weeks. Needs the wood to be chopped though upto 130p

Bank of America were quoted on Bloomberg tv that the bt pension would be a major obstacle to a takeover. Let alone govt approval

https://www.google.co.uk/amp/s/www.standard.co.uk/business/wall-street-ftse-shares-trump-a4531451.html%3famp

We will see what comes out of the woodwork next week. What I’m a little sceptical on is the private equity interest, as the price as been in this doldrum 96p to 130p range for quite a few months now and any potential private equity could of started building at least a quiet 5 per cent stake over time quite easily over time without moving price much.
But there’s been no previous declaration on rns recently of at least a 5 per cent stake being built.

But the sky story will definitely create a higher open on Monday and just the announcement of bt talking to it’s investment bankers for its strategy to defend a bid, should increase the price accordingly. Which really is the truest defence to a possible low initial gbp15bln bid

https://www.investorschronicle.co.uk/company-news/2020/08/22/bt-takes-action-against-possible-takeover-bid/

Personally any friendly bid of 30 to 50 per cent above current mkt value, will not be enough for majority of shareholders to accept.

However the news story itself will add some speculation on Monday mng to mark the price up imho

Yes just read that. That will add some pennies to the price Monday

https://www.google.co.uk/amp/s/news.sky.com/story/amp/bt-group-board-on-alert-for-15bn-takeover-approaches-12054366

https://theloadstar.com/rtr-liberty-global-launches-7-4bn-takeover-for-sunrise/

Bid not but

Fleccy
Thinks it’s global liberty but of sunrise, adding telecommunications bid in sector