Unlock Editor’s Digest for free
FT editor Roula Khalaf selects her favorite stories in this weekly newsletter.
BT’s new boss, Allison Kirkby, wants to streamline the former British telecoms monopoly and refocus on its domestic market. But selling its global operations will be difficult. These accounted for around a sixth of BT’s revenue when the figures were last split, in the year ending March 2022. But it is a disjointed mix of assets, with some outdated technology and long-term legacy contracts.
Like other telecoms companies, BT wanted a global mandate only to discover that it is difficult to stay relevant when technology moves faster than a rotary dial. Cloud services eliminate the need for custom on-site IT; The ability to leverage existing fiber eliminates the need to build more infrastructure.
Kirkby’s dilemma is that it is easier to determine sales than to eliminate buyers. Overall, when you last broke down the figures in the year to the end of March 2022, global operations made just £101 million of operating profit (almost half the previous year), while capital spending rose by 7 per cent to £201 million.
There may well be fragmented interest from commercial buyers on the margins, in certain geographies, for example. B.T. He is not the only national telecommunications champion to retreat to his base; Others may want to purchase pieces that fit their own profile.
There may also be some sectoral interest, whether from rivals or private equity. Take Radianz, used by financial institutions to connect banks, brokers, exchanges and clearinghouses. Work on a possible elimination. is already underway.
Partial sales (joint ventures, partnerships) are another option. BT’s continued presence could provide comfort to customers with long-term contracts and buyers, while allowing it to reduce risk. In 2022 he shifted his sports business towards a joint venture with the American media group Warner Bros Discovery.
Either way, it is unlikely to be a clean set of disposals that will crystallize value and demonstrate that BT is worth more than the sum of its parts. BT will most likely raise a few hundred million here and there.
But Kirkby has form when it comes to such complicated cleanups. He oversaw a similar process at Telia in Sweden. BT shares have risen about a quarter since she described his plans in May, compared to a fall in the broader FTSE 100 index over the same period.
Any sign of sales progress when it announces BT results on Thursday should help the rally. Ballast shedding boosts stock prices.