BT (BT-A.L) has put the City on alert as the group’s board prepares to defend it from a potential takeover approach from rivals after the suspension of its dividends prompted its shares to slump, according to reports by Sky News.
Bosses at the FTSE 100 (^FTSE) telecoms giant reportedly instructed Goldman Sachs to update its defence strategy to factor in a takeover bid in the region of £15bn ($19.6bn) or 151p a share.
Leading boutique investment bank Robey Warshaw, the long-standing adviser to Vodafone could also play a role. The investment bank also plays a critical part in constructing the UK’s 5G network, from which Chinese telecoms equipment manufacturer, Huawei was banned last month.
Sources told Sky News over the weekend that the company had not yet been approached by any potential suitors.
BT suspended its annual dividend this year for the first time since privatisation more than 30 years ago, leaving it with a market value of just £10bn — about half the estimated value of its Openreach infrastructure assets.
The telecoms firm saw its share price plunge by 48% this year, to close on Friday at 101.8p — with shares down 13.5% since the start of lockdown in March.
Recent share price weakness is partly due to the fact that it suspended its dividend in the face of the coronavirus crisis, with the group’s market valuation falling by 37.1% over the past year.
Any attempt to buy the national telecoms giant will require government approval due to BT’s role in defence and critical national infrastructure networks.
In July, a government minister pledged to introduce a bill in the autumn that will shape the UK’s approach to national security and foreign investment.
The company has been hamstrung by many anomalies, warning last month that COVID-19 would trigger sharp falls in revenues and profits for the full year.
In March, chief executive Philip Jansen became the first FTSE boss to test positive for coronavirus, he donated his salary to charity for six months and waived his cash bonus for two year, while continuing to run BT from self-isolation.
Previously, BT came under fire from the communications watchdog, Ofcom over its Openreach infrastructure division.
Any potential suitors could be compelled to fund £12bn for the roll-out of super-fast broadband to UK households by the end of the decade.
The UK’s largest provider of broadband and mobile services was brought to the market in 1984.