British Telecom in Broadcasting U-Turn

11 January 2002

“Flying a kite” is the term used by one major British Telecommunications shareholder of the carefully orchestrated series of nod, winks and leaks by BT in recent days to imply its imminent entry into the broadcast sector [WAMN: 09-Jan-01].

The comment came in response to a statement by BT chairman Sir Christopher Bland, who told a US conference Wednesday evening that although the UK telecoms giant might at some later date use its broadband network for TV transmissions, it currently has no plans to enter the media and entertainment business.

This [quasi] unequivocal statement directly contradicts the previous smoke signals emanating from Sir Christopher and his cohorts. Explained the unidentified shareholder: “He was flying a kite. He was trying to get a view from investors and the market in general and I think they have been given a clear and unequivocal message that this is not what the market is looking for.”

Just such unambiguous message was brusquely delivered by US investment bank J P Morgan, which earlier this week downgraded its rating of BT to ‘market performer’ because of an increase in its risk profile. “BT's focus on cash generation is threatened by an apparent desire to pursue growth avenues,” it snarled.

The market would sooner see several million fistfuls of crisp ten pound notes in the form of increased dividends, according to UBS Asset Management’s head of UK equities Hugh Sergeant.

But he did not reject in principle the broadcast concept: “This is more reflective of medium to long-term strategy so we are not particularly concerned. We would worry if there was to be a significant increase in capital expenditure without more information on the return on that.”

News source: Financial Times