Hargreaves Lansdown welcomes strong cash generation at BT
Hargreaves Lansdowne Stockbrokers has applauded BT’s strong cash generation and plans to cut its pension deficit, though competition in the telecoms sector is of some concern.
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16:44 25/04/24
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BT’s third-quarter results and pension plans were met with a poor reaction on the markets on Friday, with shares falling despite the company reporting a better-than-expected 13% increase in pre-tax profit.
The firm also announced a new 16-year “recovery plan” to pay down its expanding pension deficit, which stood at £7bn as of June last year.
“BT continues to make progress on a number of fronts, with the update justifying its position of high regard,” said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers.
“Profits which were ahead of expectations, underpinned by a strong cash-flow position. Indeed, the company’s plans to address the pension deficit, which has been a cloud over the shares for some time, shows long-term confidence in its ability to maintain high levels of cash generation,” he said.
“Meanwhile, the potential acquisition of EE is progressing well, with BT’s positioning to become a major provider of ‘quad play’ falling into place, whilst there was also strong growth in landlines and fibre broadband.”
However, Hunter also noted that the current consolidation happening in the wider sector means that competition will stay “ferocious” and ongoing talks to secure Premier League TV rights “could prove costly”.
“Even so, BT clearly means business and is flexing its corporate muscles successfully. The shares have risen 16% over the last year, as compared to a 4% hike for the wider FTSE100, but appetite remains undiminished with the market consensus still coming in at a ‘buy’,” Hunter said.
BT’s shares were down 1.8% at 421.35p by 12:32.