BT Group (BT/A LN): hello from the other side..

btI think BT can offer good value in this low yield environment, awarding patient shareholders with a 3.4% dividend. Recent broker research, shows the Openereach spin off remains an uncertainty but is less likely, given the technical difficulty in deviding pension liability and assets between BT ‘core’ and Openreach. I can imagine there would be many employees with careers in both divisions, that could pose an obstacle in allocating pension contributions and liabilities between BT and Openreach. Some interesting equity research reports from respectable sources (available here for your eyes only ) show: a) dividend remains well-covered, b) BT defends well its own market share, c) no immediate threat from Ofcom.

I think BT trades at a discount to historical valuation because many international shareholders ‘abandoned’ the stock to avoid FX/political risks after the referendum

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10yr Gilts at all time low: 

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BT stock price hasn’t recovered after referendum results, unlike many other stocks with UK exposure

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Undemanding valuation, offering Divi 3.4%, Price to cashflow at x6.2 !!

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BT trades at a P/E, EV/EBITDA below peer group average, admittedly some other telcos offer more generous dividends but are more risky with lower coverage

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