Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
BT’s new boss Allison Kirkby wants to simplify the British former telecoms monopoly and refocus on its home market. But selling its global operations will be tough. These made up roughly a sixth of BT’s revenues last time numbers were split out, in the year ending March 2022. But it is a disjointed jumble of assets, with some outmoded technology and legacy long-term contracts.
Like other telecoms businesses, BT wanted a global remit only to discover that it is hard to keep relevant when technology moves faster than a rotary dial. Cloud services obviate the need for on-site bespoke IT; the ability to piggyback on existing fibre precludes the need to build out more infrastructure.
Kirkby’s dilemma is that it is easier to earmark disposals than to snuffle out buyers. Overall, when it last split out numbers in the year to the end of March 2022, global operations eked out just £101mn of operating profit — almost half the previous year — while capex increased 7 per cent to £201mn.
There may well be piecemeal trade buyer interest around the edges, in certain geographies for example. BT is not the only national telecoms champion retreating to its home base — others may want to pick up bits that fit their own profile.
There may also be some sectoral interest, either from rivals or private equity. Take Radianz, used by financial institutions to connect banks, brokers, exchanges and clearing houses. Work on a possible disposal is already under way.
Partial sales — joint ventures, partnerships — are another option. BT’s continuing presence could give comfort to clients on long-term contracts and buyers, while allowing it to de-risk. In 2022 it decanted its sports business into a JV with US media group Warner Bros Discovery.
Either way, this is unlikely to be a clean set of disposals crystallising value and showing BT is worth more than the sum of its parts. More likely BT will raise a few hundred million here and there.
But Kirkby does have form when it comes to such complicated clear-outs. She oversaw a similar process at Sweden’s Telia. BT shares are up about a quarter since she outlined her plans in May, against a decline in the wider FTSE 100 index over the same period.
Any hint of progress on sales when she announces BT’s results on Thursday should add to the rally. Shedding ballast buoys share prices.
Read the full article here