BT Group: a takeover at Britain’s national telecoms company?
“Even in a dry August, some corporate stories force their way through the parched earth,” said Lex in the Financial Times. One of the most persistent “weeds” is the rumoured takeover of BT. Reports suggesting that private equity groups had “run the slide rule over the telecom group’s assets” saw shares jump 5% on Monday. You can’t blame the buyout barons for having a crack. BT is so cheap (shares recently touched 11-year lows) that grabbing the whole company would be a clever wheeze to gain control of its most valuable asset – the Openreach infrastructure arm. What a shame, as analysts at Jefferies note, that BT has just “begun to act as a dependable national champion” – recently promising to roll out full-fibre internet to more far-flung parts of the country.
The takeover talk is still only “loose”, said Nils Pratley in The Guardian. Still, BT’s top brass have hired “some big brains from
Goldman Sachs as expensive advisers-cumbouncers”. Ministers should be on full alert, too. They should “certainly be alarmed” by reports that Macquarie, the Australian investment house, is eyeing Openreach. “Macquarie’s last big punt on British infrastructure” – when it bought Thames Water in 2006 – “can only be called a success from the point of view of the financial engineers”.
“On a sum-of-the-parts basis, BT is clearly worth two to three times its sub-octane market value of £10.8bn,” said Alex Brummer in the Daily Mail. But the idea of Britain’s national telecoms company “hiding behind closed doors in private equity ownership ought to be anathema” – especially as ultra-fast broadband is even more crucial to the country’s prospects post-Covid. BT’s “saving grace”, for the moment, is its pension fund, which has a deficit of around £10bn. Hopefully, no buyer “would contemplate” taking that on.