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BT faces pension deficit issues

by LLB Editor
13th May 21 11:39 am

Telecoms giant BT may feel a clearer picture has emerged as several major issues facing the business have been resolved but it seems investors don’t necessarily love what they see.

The company effectively has three significant drains on its financial resources. These are its substantial pension commitments, the rollout of fibre broadband and funding the acquisition of content rights for its BT Sport channel.

“The latest valuation of the pension reveals a massive deficit which will require hundreds of millions of pounds worth of funding every year,” said AJ Bell’s Russ Mould.

“The company’s net debt pile is also pretty eye-watering, and the surprise isn’t really that dividends remain off the table for now but that they are likely to come back in the current financial year. The UK’s new super deduction tax on capital expenditure is clearly doing a lot of the heavy lifting here.

“All told though, there should be no surprise that the company wants to bring on board a partner to help meet the costs of its expanded fibre ambitions.

“There was no mention from BT today of the sale or partial sale of its BT Sport arm which had been rumoured in April.

“However, the renewed £4.8 billion TV deal agreed overnight for Premier League rights (in which Sky and Amazon are also participants) is a reminder of the kind of outlays required to feed the BT Sport machine.”

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