BT Group PLC (LON:BT.A) shares jumped on Monday followings news the telecoms firm has recruited City advisers to defend itself against potential takeover approaches from rivals following a slump in its share price.
The FTSE 100-listed firm has yet to receive a formal approach from a potential buyer, however, any approach will be viewed as controversial given the company’s planned investments in the UK’s fibre and mobile internet infrastructure, with plans to inject around GBP12bn to support the rollout of superfast fibre to around 20mln households by the end of the current decade.
The company’s shares have fallen by around 48% since the start of 2020 as the group has been battered by concerns over the cost of its broadband expansion as well as the impact of the coronavirus on its profits after a sharp fall in the first quarter. The group has also suspended its dividend for the first time in 30 years, raising concerns that the share price could fall even further and seeing more potential acquirers circling the firm
“At a valuation of GBP10bn, the group has become a definite target. And whilst BT has a lot of legacy baggage – notably GBP18bn in net debt and a major pension deficit – it’s also got the [broadband business] Openreach crown jewel, which would be (worth) considerably more on its own than the group is valued today”, said Markets.com’s Neil Wilson.
“Of course, there is no formal offer, but shares could jump further if one emerges. Deutsche Telekom, which owns 12% in BT, is seen as a likely candidate”, he added.
Wilson also noted that BT’s possible takeover might highlight other “bombed out UK-listed stocks that could be taken out by a timely takeover” such as broadcaster ITV PLC (LON:ITV), which has also seen its shares fall sharply over the year as it attempts to diversify its revenue streams away from a reliance on TV advertising.
Shares in BT were 5.9% higher at 107.9p in mid-morning trading.