Philip Jansen finally has shown his hand. BT pledges to step up its broadband work by providing 25m homes with full fibre to the door by 2026. But the capital cost means it cannot do it alone and needs to find a friend.
Meeting the ambitious and necessary target will be assisted over the next two years by Rishi Sunak’s tax relief for investment.
Standing in the way of Jansen’s ambition to bring in outside finance was former chairman Jan Du Plessis, who left suddenly two months ago.
Full speed ahead: BT boss Philip Jansen has pledged to step up its broadband work by providing 25m homes with full fire to the door by 2026
Who should BT partner up with? There is no shortage of interest in broadband infrastructure.
Goldman Sachs-backed City Fibre is seeking to bring in more outside investors and has attracted the interest of the Ontario-based pension fund OMERS among others.
BT-owned Openreach, which is in charge of the fibre roll-out, is a very different animal to City Fibre.
Most of the latter’s investment is confined to municipalities and is targeted on commercial and well-heeled customers.
There is no obligation, as there is at BT, to go the last mile to reach small businesses and more remote communities.
Nor do newbies to the sector face an entrenched, partly unionised workforce or the vast expense of an historic defined benefit pension scheme.
This does not mean that BT is without choices. But the risk-reward for would-be partners is trickier.
It will seek to rope off roll-out of delivery to 1.5m more rural locations, from more dense commercially viable projects.
There are precedents for flagship telecoms providers bringing in partners. Dutch operator KPN has linked up with a local pension fund APG. And Telecom Italia embraced an investment from private equity giant KKR’s infrastructure funds.
In Britain, freedom from the EU’s Solvency-2 rules could make it easier for UK pension funds and insurers to directly invest.
Given Jansen’s own experience of private equity, that will remain an option. As chief executive at BT, Jansen is untying the Gordian knot. Rights to 52 Premier League games have been renewed, but the whole football rights package is up for sale.
The pension fund deficit has come hurtling down from £11.3billion in June 2017 to £7.98billion now.
The ongoing repair work will go on from 2023 to 2030 at a rate of £600million-a-year. BT also benefits from a better pricing settlement with Ofcom for broadband services and a propitious outcome for EE in the 5G spectrum auction.
The pieces may be falling into place. But before Jansen presses ahead with any deals, investors need to be assured that a tough new independent chairman is place willing to interrogate executive decisions.
Investment platform Hargreaves Lansdown is a big winner from Covid. In the first four months of 2021 the number of share deals soared, it added 126,000 clients and revenues climbed to £233million.
The contrast between HL’s fortunes and the 300,000 of its clients who were directly or indirectly exposed to funds run by the disgraced financier Neil Woodford could not be greater.
At a time when markets have been surging, Woodford investors have been trapped in moribund funds, seen savings eroded and received sub-optimal pay-outs.
The opportunity cost, had that money been invested in top performing funds, would be substantial.
The slow pace of an investigation by the Financial Conduct Authority has postponed the prospects for Woodford justice and compensation.
As a result a number of class actions against Woodford, HL and others have been launched.
As gratifying it is that HL has reformed its processes since the Woodford imbroglio, its reputation has been sullied by its too cosy relationship with Woodford.
Time to set up voluntary fund for restitution to loyal but betrayed clients.
The Alphawave IP flop, coming hard on the heels of Deliveroo, is not a good look for London IPOs. The 20 per cent slump in the shares wiped £500million off the ‘deep tech’ group’s value.
The banks involved, JP Morgan and Barclays, proved too greedy for themselves and did no favours for the founders. It is the second time that JP Morgan has been involved in serious mispricing of a float.
The US bank won no friends in Europe for its misjudged backing of the European Super League. Market conditions were not at their most propitious this week with Nasdaq tech stocks under heavy pressure. But there are no real excuses.
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