Jefferies repeated its ‘buy’ advice and 190p a share price target for BT Group PLC (LSE:BT.A) in the wake of a regulatory stand-off that wiped £1.3bn off the value of the business.
Ofcom has delayed a decision on a new wholesale broadband deal from BT’s subsidiary Openreach for two months.
In a letter issued via the stock exchange, it said a decision on Openreach’s Equinox 2 plan for telecom providers such as Sky, TalkTalk and Vodafone, due by the end of March, will be delayed by two months.
“To provide certainty and stability for industry, our view is that it would not be appropriate for the offer to launch until we issue our final decision,” Ofcom told the market.
“We are considering issuing a Direction to Openreach, using our powers under the Communications Act 2003, to achieve this, unless Openreach voluntarily defers the launch of the offer.”
Jefferies pointed out Ofcom provided its provisional support for Equinox last month.
“Today's decision to prolong its review by two months creates some doubt,” it said. “We suspect that Ofcom is keen to demonstrate rigour, lowering the risk of a legal challenge. Approval remains our base case.”
In afternoon trade, BT’s share price was down 8.95p at 137.7p on the back of Ofcom’s move.