Openreach – which was split off into its own business following a demand from Ofcom in November 2016 – has long been rumoured as being on the chopping block for BT, but a new report from the Financial Times has provided the clearest view of a potential sale yet.
The report notes that BT will look to sell its multi-billion pound stake in order to fund a previously announced £12 billion investment in fibre, with potential buyers including Australian bank Macquarie and a sovereign wealth fund having held talks with BT in the past three weeks. However, a source cited by Reuters said that Macquarie has not shown an interest in Openreach and that it has not held talks with the telco.
BT’s value has been in freefall since 2015 with its value falling by 80% in that time. The continuing downward trend has led to doubts about whether the telco will be able to deliver on CEO Phillip Jansen’s plan to connect 20 million premises via fibre by the end of the decade.
Openreach is a legally separate entity, but is fully owned by BT. It is valued by analysts at between £14 billion and £22 billion. The market has responded positively to this report, with BT’s share price increasing by 9% in early trading.
Analysts at Jefferies are sceptical of a potential sale, noting that there could be “a potential timing issue” given Jansen’s £2 million stock buy yesterday. They said: “We wonder how that transaction could have been authorised if BT were at the same time engaged in non-public negotiations of such a material nature, even at an early stage.”
The analyst however notes that it is “still a relevant valuation marker” and that “infrastructure investors are confident enough in regulatory prospects to consider investing in Openreach now.”
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