SHARES in Britain’s largest internet supplier BT have been dropping sharply over the past months even though the company still continues to make significant profits and has a huge annual turnover.
It didn’t help that in line with many other companies around Europe it suspended its dividend but with a reduction of value close to 40 per cent in the last year, BT management fear that it is likely to attract a predatory takeover.
Sky News reported that BT has contacted American Investment Bank Goldman Sachs asking that it should prepare a defence strategy in the event that a takeover bid is launched.
Should a takeover actually be fact rather than fiction, it could be either a private equity firm or Deutsche Telecom AG which has shown interest in the British corporation for several years but it does come with baggage.
Like other previously Government owned organisations, when privatised in 1984, there were a number of regulation put in place by the then Government which are still extant and a new owner could well find itself at odds with those regulations which make the group responsible to the UK Government as well as its shareholders.
There’s also the matter of coping with superfast broadband and the introduction of 5G which will require greater input from British companies now that Chinese Group Huawei Technologies will have a far reduced involvement.
Add to this, a well-documented pension shortfall and any takeover could be problematic although in the long-run, the value of BT is bound to go up.