24 August 2020 08:42
No formal approach for BT has yet been made. Photo: Alberto Pezzali/NurPhoto via Getty Images BT (BT-A.L) has put the City on alert as the group's board prepares to defend it from a potential takeover approach from rivals after the suspension of its dividends prompted its shares to slump, according to reports by Sky News. Bosses at the FTSE 100 (^FTSE) telecoms giant reportedly instructed Goldman Sachs to update its defence strategy to factor in a takeover bid in the region of £15bn ($19.6bn) or 151p a share. Leading boutique investment bank Robey Warshaw, the long-standing adviser to Vodafone could also play a role. The investment bank also plays a critical part in constructing the UK's 5G network, from which Chinese telecoms equipment manufacturer, Huawei was banned last month.
Sources told Sky News over the weekend that the company had not yet been approached by any potential suitors. READ MORE: Sports Direct chairman 'accidentally' buys shares in closed period BT suspended its annual dividend this year for the first time since privatisation more than 30 years ago, leaving it with a market value of just £10bn — about half the estimated value of its Openreach infrastructure assets. The telecoms firm saw its share price plunge by 48% this year, to close on Friday at 101.8p — with shares down 13.5% since the start of lockdown in March. Recent share price weakness is partly due to the fact that it suspended its dividend in the face of the coronavirus crisis, with the group's market valuation falling by 37.1% over the past year. Any attempt to buy the national telecoms giant will require government approval due to BT's role in defence and critical national infrastructure networks.
READ MORE: Debenhams future in doubt as it draws up liquidation plans In July, a government minister pledged to introduce a bill in the autumn that will shape the UK's approach to national security and foreign investment. The company has been hamstrung by many anomalies, warning last month that COVID-19 would trigger sharp falls in revenues and profits for the full year. In March, chief executive Philip Jansen became the first FTSE boss to test positive for coronavirus, he donated his salary to charity for six months and waived his cash bonus for two year, while continuing to run BT from self-isolation. Previously, BT came under fire from the communications watchdog, Ofcom over its Openreach infrastructure division. Any potential suitors could be compelled to fund £12bn for the roll-out of super-fast broadband to UK households by the end of the decade. The UK's largest provider of broadband and mobile services was brought to the market in 1984. Bosses at telecoms giant BT have taken steps to bolster its defences against a potential takeover after a plunge in its share price. According to Sky News, the firm, which is now valued at £10.1bn, has told Goldman Sachs to update its strategy for defending BT from such a move. Read more: BT blames coronavirus as profit and revenue shrink The plans may also involve boutique investment bank Robey Warshaw, a long-term adviser to fellow telecoms giant Vodafone, insiders told Sky. As markets closed on Friday BT's share price stood at 101.8p, 48 per cent down on where it started the year. Despite the FTSE 100 picking up some 20 per cent since March, BT has in the same period slumped a further 13.5 per cent. A formal bid for the firm has yet to emerge, but any such move could have huge political ramifications, given BT's existing commitments. Before the Open newsletter: Start your day with the City View podcast and key market data Thus far, the firm has agreed to £12bn in investment to roll out superfast broadband to 20m households in Britain by the end of the decade. It also has a key role in building the UK's 5G network, from which Chinese telecoms firm Huawei was banned last month. The firm has set aside £500m to strip Huawei's technology from existing 5G networks by 2027, after the government changed its position over national security concerns. According to analyst, Deutsche Telecom, which already owns 12 per cent of the company, could be a potential candidate for a takeover approach. Read more: Huawei banned from UK's 5G network after government U-turn Last month, BT warned that the pandemic would trigger sharp falls in revenues and profits for the full year, with the dearth of sport during the lockdown and reduced activity from business customers impairing its performance. City AM has contacted BT for comment.