In a note, the global bank also cut its target price to 185p from 225p, saying that the telecoms firm was afflicted by “malaise” and they were struggling to see the shares receiving any benefits, despite what they said was “progress” on the regulation of fibre broadband in the UK.
“With yet further regulatory headwinds and an ongoing intensely competitive environment, it is difficult to see [operational numbers improving] in the next 12 months”, HSBC said.
Analysts added that this picture was unlikely to be helped by BT’s revelation that the UK government’s decision to use Huawei equipment in the rollout of 5G mobile internet was expected to result in a £500mln hit to its capital expenditure over the next five years.
HSBC also said that the company’s decision to revise down its free cash flow expectations for the full year to the lower half of the £1.9-2.1bn range was the “final straw” for the subsequent downgrade.
The assessment sent BT’s shares down 1.4% to 160.2p in late-morning trading on Friday.