April 20, 2022

BT shares soar following reports of Reliance Industries offering in India

BT shares surged on Monday following Economic Times reports Indian conglomerate Reliance Industries was alignment and offer for the London-Listed telecoms group.

The BT share price hit 167.3 pence on a Monday morning, before falling as the session progressed.

BT showed signs of recovery earlier this month by releasing half-year results highlighting the impact of cost savings on profitability.

Adjusted earnings per share rose 7% to 10.2p and adjusted profit after tax also rose 7% to £ 1,014 million.

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The jump in profitability came even though revenues only rose 1% to £ 10.3 billion. It is this stable income that attracts Reliance, as BT is still grappling with pension commitments.

Reliance was recently outbid by a PE group for Dutch unit T-Mobile and Reliance is reportedly considering BT’s Openreach rollout after BT ruled out a joint venture.

“It says a lot about the changing dynamics of the global economy that an Indian company like the conglomerate Reliance Industries may be about to launch a bid for control of UK telecommunications giant BT,” said Russ Mold, managing director. investments at AJ Bell.

“The reports come after a private equity offer for Telecom Italia that suggested the entire industry was at stake.”

“Telecommunications stocks were as unloved as a cold call on Christmas Day, and that is reflected in depressed valuations.”

“Reliance itself was the subject of an outbid on a deal to control a Dutch unit of T-Mobile as recently as September, and it could have rivals for its apparent interest in BT. The French billionaire Patrik Drahi, founder of Altice, has continued to develop a position in BT and Deutsche Telekom already has a significant stake.

“It will be interesting in this context to see if this supposed move by Reliance flushes out other parties and starts a bidding war for BT.”

“You can see why BT might generate interest. Despite its substantial pension liabilities and debts and uncertain track record, it holds a near-monopoly position on the UK’s broadband network. And, despite all of its recent woes, BT has the capacity to generate substantial cash flow. “

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