BT Blues


    A large part of the UK’s “infrastructure spend” announced in the recent autumn statement involved the “digital economy,” which Chancellor Philip Hammond said would place the UK as a, “World Leader.”

This would be nice to see, but throwing another part of the £1BN of tax-payer money at BT Group Plc, the former state-owned monopoly, is unlikely to achieve his goal.

In 2009, BT announced it would connect 2.5 million British homes to ultra-fast Fibre-to-the-Home by 2012 and 25% of the UK, following an eye-watering payment, courtesy of the UK tax-payer, yet by the end of September 2015 it had only connected 250,000 homes and BT stopped taking orders for its fibre-to-the-home product, preferring to offer the “last mile” by copper wire to both its clients and to other communications providers  via Openreach, its fenced-off wholesale division, tasked with ensuring that rival operators have equality of access to BT’s local network.

Hence, contrary to its stated objective to achieve super-fast broadband speeds for both urban and rural Britain, including the final mile to its competitors, the company has been dogged by controversy and charges that it has abused its dominant position. Whilst a relative lucky few are obtaining of decent upload speeds, many, particularly in the more remote areas are lucky to get sub-10mps, hardly world beating when you consider that I am composing this from a Mediterranean island, whose supplier’s “entry level” is at 50mps rising to 250mps and certain Countries in Asia which provide speeds of 1000mps +. This perhaps helps to explain why its share price has fallen over the past year, effectively wiping out the 2014/15 gains:


Fortunately, our colour-coded indicator signaled a change to sell, the pink panel, before the slide commenced.

Despite being privatised over three decades ago in 1984 and now operating in over 180 countries, BT is still run very much like a nationalised business, at least in this commentator’s experience. Furthermore, it’s been a “dog” of an investment over the longer term, weighed down by debt of £14BN on a market cap of £35BN and a stated NAV of just £10BN. Furthermore, the company has probably the worst pension deficit within corporate UK.

One glance at the past 16-years share price history tells a thousand words:



The BT share price remains 67% below its late 1999 high and, following its post 2009 rally it is now rolling-over once more and is back below the 200-day moving average, a bearish sign.

The dashed red-line by the way is our proprietary guide as to where the BT share price should be if the debt-effect is stripped out. In this case some 70% lower than where it currently resides.

So there we have it, more tax-payer money committed to the toilet, as BT gives no indication that it’s planning to change its copper strategy, leaving its customers’, competitors’ and share-holders alike feeling decidedly blue.










2 responses to this post.

  1. […]   The 1st December 2016 overview, entitled “BT Blues,” highlighted the dire performance of the UK’s 20th largest quoted company by market […]


  2. […] Followers of this analyst shouldn’t have been caught out as the 1st December 2016 commentary “BT Blues,” gave an emphatic warning as to the likely direction of the companies share price. Despite all […]


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