CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure. CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure.

BT shares set to see increased volatility amid M&A speculation

BT shares are likely to see increased volatility in the coming weeks amid speculation that the British telecoms company has received bidding interest from a private equity firm.

  • BT Group shares to see increased volatility amid reported private equity interest
  • Telecoms giant hires Goldman Sachs to handle bid defence strategy
  • BT shares down 45% year-to-date

BT Group shares are likely to see increased volatility in the coming weeks amid speculation that it has received private equity bidding interest, according to a recent report by Sky News.

In response, BT have reportedly hired US-based investment bank Goldman Sachs to defend against takeover approaches from rivals and buyout firms who began to circle after it suspended its dividend, precipitating its stock to fall below 100p – hitting its lowest level in over a decade.

BT is trading at 107p per share at the time of publication, with the stock down 45% year-to-date.

Any takeover bid for BT will face UK government scrutiny

Due to BT’s critical role in national infrastructure and its future development any deal that materialises would require the UK government’s approval.

Any potential bidder must consider that BT has already committed to a £12 billion investment programme to roll out superfast fibre broadband to 20 million homes across the UK before 2030. The telecoms company is also crucial to the UK’s development of 5G networks.

As such, any potential acquirer of BT would likely see any deal have legally binding commitments tagged on to ensure that the telecoms company continues to play a critical role in the development of British infrastructure.

‘At a share price of 100p, BT has an implied EV of just £40bn (post IFRS16) on our estimates,’ analysts at Deutsche Bank said in reference to the BT takeover speculation.

‘Unlike the public market, the private markets tend to appreciate the longer-term benefits of guaranteed cash flows generated after the completion of FTTH rollout, especially in an environment with low interest rates,’ the German lender said.

‘If a deal materialised, BT would be run privately, allowing it to better focus...’

BT warns that Covid-19 hit full year profits

Due to the economic fallout from Covid-19, with government imposed lockdowns halting many sporting events and reducing activity among BT’s business customers, the telecoms giant said that it expects full year revenues and profits to be negatively impacted.

BT expects adjusted revenue to fall by 5% - 6% this financial year, with adjusted EBITDA of between £7.2 billion - £7.5 billion.

‘Despite our strong operational performance in the first three months of the year, it is clear that Covid-19 will continue to impact our business as the full economic consequences unfold,’ BT CEO Philip Jansen said in its Q1 results in July.

‘Beyond this year and based on current expectations, we expect to return the business to sustainable adjusted EBITDA growth, driven in part by the recovery from Covid-19,’ he added.

BT will unveil its half-year earnings on 29 October.

How to trade stocks with IG

Looking to trade BT and other stocks? Open a live or demo account with IG and buy (long) or sell (short) shares using derivatives like CFDs in a few easy steps:

  1. Create an IG trading account or log in to your existing account
  2. Enter ‘BT Group’ in the search bar and select it
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

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