Citi has reiterated its 'sell' rating on BT Group PLC (LSE:BT.A) and trimmed its price target to 165p from 175p, pointing to long-term downside from the telecoms group's pension scheme.
The reduction is driven less by trading than by the Pensions Regulator's Low Dependency Funding Basis, a framework requiring schemes to reach a position where they no longer depend on the sponsoring employer for support.
Citi sees that regime creating lasting downside risk for BT, which carries one of the largest corporate pension schemes in Britain.
The bank has also reworked its forecasts to treat BT's international division as discontinued, ahead of the completion of the joint venture with Verizon in 2027.
Underlying that call is a deteriorating picture in the UK fixed-line market.
BT, Virgin Media O2 and TalkTalk all reported year-on-year declines in fixed average revenue per user, or ARPU, the amount each customer generates over a period.
Growth rates worsened quarter on quarter across all three, a reminder of how difficult the domestic broadband and landline environment has become.
Citi also drew on BT's regulatory financial statements, published on Friday, in updating its view.
The note leaves BT among the more contested large-cap positions in the sector.
The pension scheme has long been the swing factor in valuing the group, with the triennial funding process capable of diverting cash that investors would rather see spent on the full-fibre rollout or returned as dividends.
Citi's target implies limited room for the shares to run from current levels.
