UBS has reaffirmed its ‘Sell’ rating on BT Group PLC (LSE:BT.A), citing ongoing risks despite signs that competitive pressures from alternative network providers (altnets) may be easing.
The telecoms group, currently trading at 185p, sits near the top of its five-year range, well above UBS’s revised price target of 140p issued on January 19.
Analysts Polo Tang, Dhruva Kusa Shah and Christina Michael noted recent industry restructuring and Openreach's special pricing offers could support BT’s retail broadband performance.
However, they warned that risks remain underappreciated, including potential price cuts at Openreach, competition from satellite and fintech MVNO entrants, and required investments to match the Vodafone-Three merger.
"While altnet growth may slow, large players still pose a pricing threat," the analysts said.
They added that Openreach may consider price cuts to defend market share, but any such move could hit EBITDA and FCF, potentially costing up to £400 million annually for every 10% cut.
Investors reportedly favour Vodafone over BT, viewing it as a better-positioned challenger benefitting from merger synergies and share buybacks.
UBS remains cautious on both names but sees limited upside for BT amid uncertain pricing dynamics and infrastructure demands.
The shares were little changed at 184.7p.