Regulator Ofcom’s push to have the UK emulate Spain and roll out an all-fibre telecoms infrastructure could provide a major windfall for BT PLC (LON:BT.A), according to one London research house.
Haitong in a note to clients said: “For BT, apart from the obvious benefit, we think higher wholesale prices also mean less priced-based competition for BT Consumer (because input costs for all rivals will rise) and a more highly rated equity overall.”
It repeated its ‘buy’ recommendation on the stock and 560p a share price target.
The stock, down 18% in the last year, is currently changing hands for 380p.
The fall in the value of BT has been largely down to two factors – the company’s large pension deficit and the spat with the watchdog.
Ofcom wants BT’s Openreach division, which owns and runs most of the UK’s telecoms infrastructure, to be managed at arms’ length from the main group.
The two sides came to an impasse over plans on how this would be best done.
And it led Ofcom to order Openreach be split off from the rump of the business.
The uncertainty doesn’t appear to have put off City analysts.
Of the 14 logged as covering BT, eight are ‘buyers’ and only two have ‘sell’ recommendations. The remainder are ‘neutral’ on the telco.
The consensus price target, which was 480p six months ago, currently sits at 456p – still well above the current market valuation.