BT’s miss may spur big investors into action
Trumpeting massive job cuts is usually one way to boost a share price. Not for BT. The 14 billion pound telco said on Thursday it would shed 55,000 jobs over the next seven years, but shares slumped 8%. That will stretch the patience of Deutsche Telekom and Patrick Drahi’s Altice, which collectively control 30% of the UK group.
For all BT boss Philip Jansen’s talk of the potential for artificial intelligence to shrink the telco’s cost base, investors had already largely factored in the cost benefit from major job losses. Instead they focused on vague 2024 guidance and free cash flow at the low end of his 1.3 to 1.5 billion pound guidance, not helped by big ongoing investment needs for BT’s Openreach division as it installs fibre cables to UK consumers.
Drahi’s stake has lost 17% in value since he increased it in December 2021. Deutsche Telekom boss Tim Höttges said in February he wanted his money back on an investment he acquired in 2015 as part of the sale of EE to BT, which is currently showing a 4 billion pound paper loss. The catch for Drahi and Höttges is that it’s not obvious what they should demand to reinvigorate BT’s share price. Berenberg only assumes the group’s equity is worth 15.7 billion pounds on a sum of the parts basis – implying limited upside from a breakup. Still, if the two bigwigs decide to join forces, BT’s job cuts may yet move up to the company’s C-suite. Reuters
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