53% Return seen by The Edge, Investors turn blind eye to threat of forced break-up of British Telecom
Jul 17, 2015
By Nic Fildes, Senior Writer, The Times:
The prospect of a break-up of BT did little to slow the progress of its shares yesterday as investors shrugged off the threat. BT stock closed up 2¾p at 472¼p despite the threat from Ofcom of a forced separation of the company’s consumer arm from its networking business, Openreach. BT bulls found plenty in the tone of the regulator’s statement to suggest that “structural separation” was not a realistic possibility.
Ryan Mendy, chief operating officer of the Edge Consulting, took a contrary view and said that a break-up would be good news for investors. He said companies that have demerged, such as BT shedding Cellnet and Yell, and TalkTalk splitting from Carphone Warehouse, outperformed the wider telecoms sector. Parent companies generated returns of 20 per cent two years after split, while spinoff businesses returned 53 per cent on average, he added.