Investors increase bets against BT as new boss prepares to present annual results

Four big investors have increased their bets against BT Group this year as its new boss prepares to brief shareholders on the telecoms giant’s progress later this week.

Canada Pension Plan Investment Board, BlackRock, AKO Capital and Kintbury Capital have collectively amassed a short position of almost 2.8 per cent of BT shares, regulatory data shows, reflecting bets against the group worth about of £300 million in total.

BT faces concerns about competition from the so-called ‘alternative network’ and plans to cut tens of thousands of jobs, cut costs and aggressively expand its superfast full-fibre broadband across the UK, through its subsidiary Openreach and its 5G network.

Chief executive Allison Kirkby, who replaced Philip Jansen in February, will on Thursday reveal the group’s financial results for the year, which are expected to show profits of more than £6.1bn by 2023 thanks to higher prices.

Investors will be closely monitoring Openreach, which posted top-line losses for the first time last year, as well as free cash flow amid excellent spending plans.

BT aims to complete its broadband rollout work by the end of 2026, when it says 25 million homes and businesses will be connected.

Up to 55,000 roles are expected to be eliminated across the business by 2030, as new networks replace old ones and as part of plans to digitize more processes.

Kirkby, a non-executive director of BT since 2019, who will earn £1.1m a year and an annual bonus equal to double her salary depending on the company’s performance, will also be tasked with delivering a cost savings target of £ 3 billion by the end of 2025.

bt stock have been through a torrid period of late, falling more than 11 percent since the beginning of the year and almost 46 percent in the last five.

Investment bank UBS warned last month that “things will get worse before they get better” for BT, estimating that Openreach line losses will widen to 489,000 this year “and remain high in the coming years”.

Some investors also reportedly want BT to reduce its investments in mobile and broadband and invest its money in other industries.

UBS also forecasts that BT will face greater pressure on free cash flow as a result of higher spending, which could force it to cut its dividend in half this week.

Reaffirming its position this week, UBS said: ‘We do not expect significant changes to the group’s strategy or perimeter from the new CEO.

‘However, increasing competition in broadband infrastructure means we expect broadband line losses at Openreach to be worse.

‘Normalized guidance (free cash flow) could be better if BT leaves capex unchanged, but we believe Openreach needs to accelerate fiber rollout to preserve its position and, along with the prospect of higher restructuring charges, this will put pressure on the reported FCF. risking a dividend cut.

“On the pipeline, we think the bulls will wait for a stake sale in Openreach or other divestments to unlock value, but we see this as less likely given that most of the income will likely flow into the BT Pension Scheme and any remaining income will be ” “more likely to be used to accelerate fiber deployment rather than reach shareholders.”