BT drags down FTSE 100 after shares slump
BT shares slumped five per cent in early deals this morning after it was revealed that Sky had struck a broadband deal with one of its biggest rivals.
Shares in the FTSE 100 telecoms giant extended losses to trade as low as seven per cent by mid-day. The stock’s performance dragged down the wider FTSE 100, which fell 0.7 per cent as a result of BT’s poor performance.
Sky is expected to launch its broadband services on Cityfibre’s network from 2025, the two companies said.
BT currently hosts all of Sky’s broadband customers—around 5.7m customers—on the company’s Openreach network.
“The BT impact is through its Openreach business, which has Sky as its biggest external partner,” explained Matt Britzman, senior equity analyst at Hargreaves Lansdown.
“There are genuine concerns about its reliance on a single customer, but a deal with Cityfibre is unlikely to have a major impact on the current relationship.”
Britzman added: “Cityfibre is a struggling business, desperate to show its lenders that it has something tangible in the works, it’s also more focused on rural areas where the likes of Openreach aren’t building out fibre networks – so there’s likely limited cannibalisation of Openreach’s existing business with Sky.”
Cityfibre currently has 400,000 customers in the UK with a footprint of 3.8m homes passed and plans to increase the total to 8m by the end of 2025.
This progress has led to it becoming the third largest broadband provider in the UK after Openreach and Virgin Media, and it has since reported positive operating profit.
In March, the company announced its acquisition of internet provider Lit Fibre, which it said has boosted its nationwide full-fibre rollout by up to 300,000 sites.
This is expected to include over 1.3m homes in rural areas as part of the government’s Project Gigabit programme.
Last week, BT’s largest shareholder Altice announced it would sell off its 24.5 per cent stake in the company to Indian conglomerate Bharti.
Under the terms of the deal, shares equal to 9.99 per cent of BT’s stock were transferred imminently, with the remaining 14.5 per cent moved over following regulatory approval.
Bharti framed the deal as a “vote of confidence in the UK as an attractive global destination for investment”.