BT Group PLC's (LSE:BT.A) short-term issues have been neatly summarised by analysts at US bank JP Morgan ahead of a roadshow by the telco’s still relatively new chief executive Allison Kirkby.
Key takeaways included no plans yet to spin out Openreach with a 2% a year line loss already assumed in BT’s business plans.
Openreach has consistently been valued more than the rest of BT and is seen as one of the reasons why French group Altice has taken a big stake.
BT does also not anticipate any change to either the WFTMR (fibre regulation) or “social tariffs” irrespective of which party wins the General election, noting a constructive dialogue with both the Tories and Labour,
On the fibre roll-out, additional contractor capacity has become available, which has enabled BT to negotiate attractive new multi-year deals with sub-contractors, driving capex savings and estimated free cash flow [EFCF] upgrades.
JP Morgan adds that BT hopes that offering long-term guidance will address the long-duration nature of its “fibre-led” equity story and attract LO [long only/buy and hold] investors.
A £3bn EFCF target by March 2030 is considered a prudent base case, but points to double-digit returns,
BT will also take decisive steps to stabilise KPIs, says the bank, though this might see consumer revenues slip in the coming first half.
The shares were up 1.7% at 133p on Monday.