BT bounces on rumours of Openreach stake sale
BT began to bounce back off nearrecord lows as rumours circulated that it was selling a stake in its Openreach engineering arm.
The telecom group’s shares surged 5.4pc, or 5.55p, to 107.7p after reports it would use the money to bankroll a £12bn upgrade of Britain’s broadband network.
Earlier this week, shares in BT sank to their lowest level since 2009, and are still below their 1984 listing price of 130p.
The stock has been pushed down as investors have flocked to trendier tech firms, and BT further irritated shareholders this month when it suspended its dividend for the first time in 36 years due to coronavirus. But the sale of a stake in Openreach would help boost the flagging share price, and give it some much-needed cash.
Potential buyers including Australian infrastructure investor Macquarie and a sovereign wealth fund have held talks with BT over the last three weeks, the Financial Times reported.
The deal could value Openreach at round £20bn, around twice as much as BT’s market value. Openreach’s chief executive Clive Selley issued an apparent denial of the deal in a memo to employees, saying he had spoken to the BT group boss Philip Jansen.
Selley said: ‘He is very clear – the story is inaccurate. Openreach is staying in the BT group.’
But Selley did not address a sale of a minority stake, which would not involve Openreach leaving the group. Investors were still holding out hope, as the shares held higher throughout the day. Coach company National
Express gave its investors something to smile about, as it said its profits for the year were ahead of where it had expected them to be.
The business has been hit hard by Covid-19 and the restrictions on travel, and said revenue for April was around half of the same month last year.
It was expecting to make a loss for the month, but actually managed to stay in the black after reducing operating costs by around £100m. And where the lockdown is beginning to end in the US, National Express managed to bag a new school bus contract. In the UK, it has begun selling coach tickets in preparation for a 1 July lifting of travel restrictions. Shares motored up 13.3pc, or 24.2p, to 206.4p.
The FTSE 100 just about managed to hold its gains for the day, following a jittery week.
The blue-chip index was up 1.01pc, or 58.23 points, at 5799.77, as signs that China’s economy was recovering helped lift the miners. The
FTSE 250 was up 1.66pc, or 256.18 points, to 15,660.77.
Because China is the world’s largest economy, and has a huge manufacturing industry, metals producers tend to be tied to the country’s fortunes. Fresnillo was up 6.1pc, or 42.4p, at 737.6p, BHP Group up 4.3p, or 58pc, at 1413.2p, and Anglo American up 5.1pc, or 69.6p, at 1433.8p.
Over on AIM, online fashion retailer Boohoo raised £197.7m on Friday after selling nearly 60m shares at a discounted price. It is around 5pc of Boohoo’s overall share capital. The company said it will need the cash to take advantage of all the opportunities it predicts will crop up in the fashion industry in the months to come. It is assessing several merger and acquisition opportunities, Boohoo said. Shares climbed 1.6pc, or 5.6p, to 356.9p.
Evgen Pharma, a drug development company, saw its shares shoot up 17pc, or 2p, to 13.75p as it confirmed it was in discussion with a ‘potential source of funds’.
It is hoping to bag some money to explore whether its SFX-01 drug, being developed to treat some forms of cancer and containing compounds similar to those found in broccoli, could work to treat Covid-19.