May 11, 2017

BT tries to reset fortunes with restructuring plan

BT has attempted to draw a line under its worst performance since the turn of decade with a restructuring of its scandal-hit international arm, the loss of 4,000 jobs and a warning over the size of its dividend next year. Some of the uncertainty over the outlook for BT has been caused by a potential shift in its position on building a more widespread fibre network, with a new consultation on a strategy to upgrade the Openreach division which provides the majority of broadband connections in the UK. Openreach, which is still owned by BT but functionally separated, provides broadband services to BT and its rivals. Stephen Snaith, head of telecoms research at Allianz Global Investors which owns about 1 per cent of the company's shares, argues that the dividend cut was "Understandable" and that the valuation of BT was "Lowly" even for a business "Under a cloud of regulation, operational/fraud issues in Italy and a tough competitive backdrop". BT has brought in a new management team at Global Services, with its boss Luis Alvarez leaving as a result, who will need to act fast to improve the struggling unit's performance little more than a year after BT fancifully claimed that it been turned round. Openreach, the broadband arm of BT, wants to build a more widespread fibre network in the UK with support from rivals such as TalkTalk and Sky.

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