BT Group PLC's (LSE:BT.A) consumer price increases may be positive for investor sentiment but the net impact may not be as high as expected, according to telecoms analysts at UBS.
The Swiss bank's analysts pointed out that while the 14.4% (CPI plus 3.9%) price hikes in April “suggests upside risk to BT Consumer estimates” BT shares have already rallied by 15% in the year to date ahead of the event.
The UBS analysts are also wary of interventions on price by the government and/or regulator highlighting comments from the culture secretary that “imposing above-inflation price hikes is not the right thing to do” while Ofcom is reviewing whether CPI-plus increases were made clear to consumers when they signed up.
They also noted that in 2022 a 9.3% price rise at BT Consumer did not translate into EBITDA upgrades given cost inflation and downgrades elsewhere in the business and while the analysts think UK operators can put through price rises for 2023, pressures are rising on the UK consumer.
Vodafone is expected to be a market share winner in the UK, according to the UBS analysts, who also expect an update on the progress of Vodafone's merger talks with Three UK, while investor focus will also be on whether German trends can improve, the appointment of a new CEO and clarification of Etisalat’s intentions with regards to its stake.
On BT, they think the shares will remain volatile with upside potential in Consumer offset by growing infrastructure competition for Openreach and uncertainty around the pension deficit.
Shares in BT were trading 1.7% lower at 125.80p in midday trade on Thursday.