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BT sinks below 200p as Deutsche Bank downgrades to ‘sell’ amid dividend fears

Last updated: 13:30 24 Jun 2019 BST, First published: 12:10 24 Jun 2019 BST

bt tower
Deutsche Bank expects BT to cut its dividend to 10.3p next year

BT Group PLC (LON:BT.A) shares have sunk below 200p after Deutsche Bank slapped a ‘sell’ note on the struggling telecoms giant.

Deutsche had been a long-term BT bear, but changed its tune earlier this year, rating the FTSE 100 company as a ‘hold’ given its belief that the European telecoms industry looked “cheap”.

READ: BT's dividend is safe...for now

But the analysts have now reversed their recommendation, describing BT as “one of the least attractive” stocks in the sector.

They cite “low levels of fibre deployment and the less advanced state of convergence competition in the UK (versus other markets)” as two key reasons for their downbeat outlook

In last month’s full-year results, BT upped its target for the number of homes with fibre-to-the-home (FTTH) broadband connectivity to 4mln by March 2021 – a million more than the previous aim.

Divi under pressure?

Deutsche says that will inevitably see BT’s capex rise which in turn threatens the planned earnings (EBITDA) recovery.

“To avoid continued strain on BT's balance sheet (we see little relief on the pension front given lower interest rates globally) we now anticipate a cut of BT's dividend to 10.3p (5.0% yield) from FY21,” the number crunchers said in a note to clients.

Alongside the ‘sell’ note, Deutsche slashed its price target to 175p (from 217p).

BT shares were down 2.2% to 197p in early-afternoon trading, valuing the company at under £20bn. In January 2017, days before BT was rocked by an accounting scandal in Italy, the shares were up at almost 400p.

--Updates for additional analyst comment and share price--

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