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BT share jitters pre-empt results
Analysts wary of underperforming incumbent...

By David Meyer

Published: Thursday 27 July 2006

Shares in BT Group slid by nearly one per cent on Wednesday ahead of the publication of its first-quarter results on Thursday, following suggestions the company is underperforming in relation to the overall telecoms market.

The results, covering April to June this year, will be the first to include indications of the success of Openreach, the spin-off designed - at the regulators' insistence - to allow BT's rivals equal access to exchanges.

On Wednesday, financial research company Standard & Poor's cut BT Group's long-term corporate credit rating from A- to BBB+, blaming increased competition and the group's "comparatively weaker business profile".

Meanwhile, a report by analysts at Credit Suisse, released on Monday, predicted BT would lose customers at an increasing pace because of local loop unbundling, which allows rivals to make savings after a hefty initial investment by installing their own equipment in BT's exchanges rather than buying capacity from BT Wholesale.

However, Credit Suisse's analysts also suggested the separation of Openreach might "confuse divisional performance" but would probably not affect BT's profitability for now.

Overall, the financial services company rated BT Group at "underperform" compared to the overall telecoms sector, and forecast Q1 revenue of £4.89bn, a slight increase from £4.78bn in Q1 2005.

David Meyer writes for ZDNet UK