Sometimes people, including the government, appear to forget that they privatised BT. The government of the time was happy to take the cash this generated and to pass over responsibility for the generous 'civil service' style pension scheme to the new owners - you and me.
Now, BT has a resource - the cableways, wayleaves and local premises (exchanges etc) needed for fibre roll-out and the government of today wants to accelerate this process. So there must be a quid pro quo if this is to be done without ripping off BT's shareholders.
The regulator is charged with ensuring that BT provides the necessary services at a reasonable commercially viable cost. Part of the cost of creating the infrastructure that is now so valuable lies in the legacy of the pension scheme.
In other words, government cannot have the cake and yet have eaten it - having sold off the infrastructure and rid itself of the pension responsibilities associated with it, it cannot now demand that it is opened up virtually FOC to BT's competitors. An equitable deal, based on the real cost of that infrastructure, must be done.
I see no reason why VM and other infrastructure telcos cannot share BT (Openreach) poles and ducting - AS LONG AS THEY PAY. Agree that BT/Openreach should upgrade all copper to fibre but it will take years.
Rightly or wrongly when I look at adding to my holding I am hesitant because 10.55p dividend is set to cone off the price so if I wait and price is trading say 204p to 210p band, I in theory should be able to buy my new holding at 194p to 200p. It would also bring my average price down as well.
Another reason for my hesitation is clarity over current CEO - does he go or stay?
I hold the view the CEO should go and BT should appoint an outsider as CEO, one who has both ideally worked at BT and succeeded outside the BT business - somebody like Mr Dunne at Verizon/Telefonica UK and BT
I was very tempted to buy a small amount of BT last week.
On reflection, may just add a few more VOD instead,
although the recent TA view on Vodafone posted by ii
might be worth noting.
Vodafone's FY presentation was the first in years
where I could see upside, the market disagrees atm! ).
Debt my main concern re VOD.
I think (without checking) closed periods, when directors are not allowed to trade shares, begin 2 months before the release of any price sensitive information. When a company releases quarterly updates as BT does, that leaves little time for them to make their trades, and one thing we never know until it happens is what interim announcements may be on the way, for instance if they are going to announce a sale or purchase or lay offs o investments in the next 2 months, they are not allowed to trade.
I'm not suggesting that is the reason, but it is a possibility. The AGM statement is 68 days off, so if no announcements are expected before that I believe they are free to trade for the next 8 days.
Wow! FRTEB and Macbonzo have declared potential prices for BT in seven months time.
Fair play to them - it's an impossible call in my view. Chartwise, BT is on a a quid per year declining trend with absolutely NO sign of a reversal yet. Sure, there have been rallies to nearly the previous high - but they've never been sustained and the sp always drops to a lower low. On pure trend I'd have to conclude that BT is heading for the £1.40 to £1.70 range by the end of the year - ie FRTEB's £1.50 if you exclude his recovery factor So he get's a bluey from me.
Maybe there'll be a reversal at some point - there really should be, because £2 is, in my view, an oversold situation - but I've been wrong about that since around £2.60. Well, Maco is lower than my original oversold estimate but closest to it - so bu55er me - I have to give him a vote too.
I confess that, on balance and assuming the down trend does stop fairly soon, I think the sp could land anywhere in the £2 to £2.50 range. But, hey, I may have managed a lossless exit by then. FRTEB and Maco are at opposite ends of that range - so I guess, having given a bluey each, I'll have to stay neutral for now .
I'm inclined to agree about Patterson, Stutes, things have certainly gone awry on his watch. It's just the mechanism that concerns me. Can he be removed without causing even more turmoil than, say, by initiating the plan and then doing a handover in a a year's time to someone chosen in a rigorous manner. I'm also concerned that 'he' is the focus rather than details of the 'transformation plan' itself. More pain ahead for sure in my opinion.
LOL @ the new 'Subject Line' I'll let it stand for it's comedy value. And the daft typo.
But, pitass, read your own post again and see the flaws. No, not just the godawful spelling, but the logical flaws.
You say that 'you think' something is the case because of 'the fact' that something else is true. You do that repeatedly and it makes for an absurd case. You are saying that 'You think' that if all the ingredients of a 'no lose' situation are in place, then you cannot lose. That, of course would be true, but with what value?
But the basic pretexts that you propose are, themselves, pretty speculative.
'bt got rid of all the skeletons in the cupboard' - Your evidence? They've been finding skeletons for decades: They'll find more.
'they have come to grips with the fact that diniasors (sic) do not have a long life expectancy' - This suggests that BT still employ dinosaurs, but so what? They may replace the current generation of low value employees with a fresh tranche of low value employees. That does not guarantee any sort of success.
'the divi almost guarnteed (sic) ' - I think even 'almost' is a stretch.
'the pension problem is now in the open and addressed' - It's been in the open for many years. It has not been effectively addressed. Hell, the £2bn payments that BT has lined up are in the form of newly issued bonds. BT are giving IOUs to shore it up with!
'costs can easily be cut without detrement (sic) to business' - Really? So there's plenty of waste still and the management have it in focus?
'and the infrastructure is all there' - FAR, FAR from it. Much current infrastructure is old and stressed.
I worked for BT for >35 years. I saw lots of good AND bad employees leave: The better ones tended to take the money and run and the dead wood tended to stay. (I ran :o)
I saw an awful lot of bad managers pass through, with their latest management fad for fixing the company's ills. I saw many of those bright ideas crash and burn or fizzle:-
MMO2. 3G licenses. Sell O2. Sell all their land and lease back. Buying MCI, Not buying MCI, Merging with Worldcom. Not merging with bankrupt Worldcom. TQM, RFT, BT Fusion - Vallance said it was the company's great new future. So was 21CN. So was BT Vision and now it's BT Sport. And every time, these damp squibs either fell by the wayside or drained money. Many of the bright ideas were set to save millions over some future timescale, but those savings and profits seldom actually happened as the initiatives faded from memory. Current plans to shed jobs are spread over 3 years, but the cost savings are assumed as 'a given' Time and time again, money that had to be clawed back through yet more cost cutting and redundancies and selling or mortgaging assets in fire sales and plucking money from the pension fund and 'creative' approaches such as buying longevity insurance and setting up insurance companies just to be able to cut their own longevity insurance costs. It's been a relentless decline in the company fortunes and in our shareholder value.
You see the end in sight. I don't.
I've made good money with BT shares, but like many, I bought and held far too many for far too long.
I don't have a clue how it will end or whether I'll stick around to find out.
A takeover would be nice, maybe by DT or Sky or Tata or ZTE or some entity that is not yet on the radar.
In regard to your rely to my posting, it would appear that you do not seem to have got the basic point which was
I qualified the buy action by saying that if you believe that the price would not drop below 2.00 In this case you would invest 20400 pounds and even if the share doesnt move at all in the 18 months you would still get your 20400 capital back PLUS you would have trousered the divis of 2250.00. In view of the fact that shares are speculation can you think of any reason that you would not speculate when the chances of a loss are so small I also qualified the risk by saying that I will allot 20% of capital to this share in the knowledge that the other 80% will be in more speculative investments, and not such a high chance of getting an 11% return on capital Think about it
Pitass, you really need to read your own post. How do you cut cost with a detremental (sic) effect on business? Put the call centres back to India? Employ more squadies to do Openreach engineers jobs? All BT have done is cut costs and that is a big part of why the shares have fallen almost 60% off their highs.
As far as the takeover thing, let me be diplomatic and say it is fanciful.
Anyway I have penciled in the 19th of October 2019 to response to the 375/400 share price.
If you are in anyway close be being right, I will consume vast quantities of humble pie.
I agree that Patterson should go and be replaced by someone new from outside to implement the transformation strategy. However, with a new CEO in place there's lots of scope at BT for a kitchen sink job so I think a 50% or more dividend cut would be possible if not likely. Long term though, I think a fresh face is needed. Patterson has had his chance and he's been handsomely rewarded and incentivised - he's just not hungry enough. Time to go.
No Lose situation? Well that's remarkable foresight. If you are confident that you can quickly double your money, you would be a fool to invest 10k. You'd be far wiser to mortgage everything you can, max out every possible line of credit, and maybe invest a million or two.
But then again, it isn't a 'no lose situation' at all, is it.
You make valid points but it seems the CEO has lost the ear of the City, even p20, today's FT has the headline" Patterson has right plan for BT but he is not the one to implement it."
When you have lost the confidence of the City/business media and the share price is low then the only two options are to change leadership or face down the City for x yrs till there is a change of mood. I prefer the the first option as Mr Patterson has already done 4yrs+ as CEO and what new thing can he bring to the table?
Looking into the various news feeds over the ast year,I think that not only have bt got rid of all the skeletons in the cupboard, they have come to grips with the fact that diniasors do not have a long life expectancy Because of this I believe that there will in the next twelve months be a positive change for the better and this is a share which whether by progress or a hostile bid will once again reach the 3.75//4.00 range. With the divi almost guarnteed this must be a back burner buy. basically the pension problem is now in the open and addressed, costs can easily be cut without detrement to business and the infrastructure is all there So I predict that should you buy say 10000 today in 12/18 months time you could be sitting on a 20000 gain and 2200 in the bank from divis In the belief that this share will not drop below 200 then it is a no lose situation
Your dissatisfaction with the CEO is shared by many but, having just announced a transformation strategy, surely the AGM will be more concerned with that and whether it will move BT forward whilst addressing the issues you mention. We must also assume that Deutsche Telekom with their 12% stake (and consequential writedowns) are fully on board with the plan and, therefore, behind GP.
If the strategy meets with general approval then it is difficult to see why the CEO, who, is responsible for it, should be removed. Indeed, it would be damaging to the entire project and to the business if he were. Would a new CEO be expected to continue with a plan put in place by his predecessor? A change of CEO once the plan is started would inevitably lead to a hiatus and further uncertainty.
So, perhaps we should be debating the merits of the transformation strategy, for it is upon that that BTs and GPs future depends.
Well my viewing habits are probably out of date now, but I see streaming services like Netflix, Amazon etc. as good if you want to watch films or box sets or other standard content like that. But TBH we dont watch too much of that kind of stuff, we had Sky Movies for a long while but eventually gave it up when we realised that we hadnt watched a single movie on those channels.
What is important for us is having the widest possible range of live TV channels, preferably in HD, and year round access to live sport channels. I looked at Nov TV after your post and yes you get quite a big range of TV channels (but far fewer than with Sky) and yes you can access Sky TV content if you pay for a pass (but for a selected period only and at significant cost).
For me series linking and downloading are quick and convenient and my 2TB drive in my Sky box provides ample room to store the content. So while I am probably behind the times I am very happy where I am though would like to move up to UHD at some point !!.
I suggest BT have until the July 2018 AGM to either address capital spend/free cash flow concerns or axe the CEO otherwise it could be very rough for the Directors come the AGM. The directors need to provide support for the share price if the don't they run the risk of a shares trading below 200p, say 180p or less, come the AGM, which will add to shareholders' discontent.
The clock is ticking - will the Directors be up to the task that is the question?
Jan du Plessis in his address to city analysts last week stated he had recently purchased £1m of his own personal money in BT shares, such was his confidence in a turnaround of BTs fortunes. He also gave a vote of confidence Patterson, who has done absolutely nothing for the company according to many.....except overseen the takeover of EE and brought BT Sport to the fore. Im not sure about Patterson, he seems ok to me, but clearly the city isnt that keen. Whether that vote of confidence was a Premier League type of vote of confidence remains to be seen.
BT is not a bad company. Sure it has its red tape/bureaucracy but what company that employs 100k people doesnt? BT is massive but is poor when it comes to shouting out its achievements. Ask anyone in the street what is BT they would probably say phones and broadband, possibly football broadcaster. BT is a lot more than that. The company needs to stop being modest in my opinion.
And that, of course will make the pension deficit worse....
I'm not familiar with the BT schemes but ordinarily an 'actuarial reduction' applies to a pension taken early, this would usually be calculated at the time the early pension is requested and, naturally enough, is supposed to adjust it so that there is no adverse impact on the fund.
"104 weeks wages to leave, anyone 55 or over will jump on that"
And that, of course will make the pension deficit worse. If those still in the scheme (which are the longer serving employees) leave early, revenue will decrease, and maybe they will start taking their pension earlier than expected., so the outflows start earlier.
I've just had a look at the directors share purchases and apart from two paltry buys of about 900 and Isobel Berwick's buy of 9000 a few weeks ago, there has been nothing significant. Surely if the Board really believed in the company you would see buys of 200K plus?
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