The FTSE 100 telecoms company is a key holding in host of UK equity funds, including TM Sanditon UK Fund, Fidelity Special Situations and BlackRock UK Income.
It confirmed on Friday that it had reached an agreement with Ofcom to legally separate its subsidiary Openreach, which controls the UK’s national broadband infrastructure.
The regulator forced the issue of a legal split back in November 2016, citing major “competition concerns” since Openreach builds and maintains the copper and fibre lines competitors Sky and TalkTalk also need in order to bring their customers online.
But while Ofcom put up a tough front late last year, the final deal with BT was much softer than markets had anticipated.
Rather than a full break up of BT and Openreach, Ofcom consented to a more palatable, partial split.
Though Openreach will become an independent entity and have its own branding without a BT logo in sight, the telecoms giant will still retain full legal control of its former subsidiary’s assets. And BT will maintain control over Openreach’s capex budget.
The transfer of employees and their pensions, one of the main areas of disagreement, has also worked out in BT’s favour.
The 32,000 employees who do transfer to the separate Openreach entity will have fair and free access to their pensions, which will remain under BT’s roof.
BT was the FTSE 100’s top riser at the time of writing, jumping 4.3% to 344.5p.
“From a shareholder’s perspective, this was a very reasonable outcome and the shares are right to rally today,” said Stanojevic.
But while the “shares have come a long way” from the profit warning BT issued in January, Stanojevic remains sceptical of the company’s prospects.
“BT is not necessarily great value right now given what is going on with its global services, the Italian accounting issues and the recent profit warning, pointing to a slowdown in the UK public sector.”
