UBS has repeated a ‘sell’ rating for BT Group PLC (LSE:BT.A) with analysts recasting concerns over heightened competition from ‘altnet’ broadband providers in the UK.
Pitched at 135p, the bank’s price target sees downside of around 36% from the prevailing share price of 212p.
The Swiss bank’s latest review of UK broadband and mobile pricing found competition has intensified in the third quarter.
Alternative networks, aka ‘altnets’, continue to undercut pricing by up to 30% compared to established operators like BT, whilst still offering faster speeds.
Since April, most broadband operators have cut headline prices by £1 to £4 per month.
The use of promotions and switching incentives helps BT offset in terms of new signups, UBS noted, but it also expects a knock-on effect in the form of lower revenue per user metrics.
Meanwhile, the bank called BT’s annual April price rise (£4 per month) “risky” given that rivals have not matched it.
UBS noted that BT’s cost savings are offsetting weaker top‑line trends, resulting in stable EBITDA, but it sees
UBS identified several potential near‑term risks, including the competitive pressure from the Sky/CityFibre partnership.
Analysts added that improvement in BT’s Openreach line losses may prove temporary, while competition from lower‑priced, higher‑speed altnets continues to put pressure on broadband subscriber growth and pricing.