COMPANY DESCRIPTION
BT Group plc (BT or "the group") is a communications services company providing fixed-line services, broadband, mobile and TV products and services as well as networked IT services. The group has strong market position and thereby operates in a favorable competitive environment with certain non-replicable advantages. However, adverse macro-economic conditions continue to pressurize corporate spending which will in turn adversely impact BT's growth prospects.
ECONOMIC MOAT
In our opinion, BT economic moat comes from core assets and service contracts. BT owns the only telephone network that reaches the entire population of the U.K. Other competitive advantages are BT’s strong core infrastructure, the long-term nature of most contracts and significant costs associated with switching carriers.
OUTLOOK
BT Group is set to become a big player in wireless. In February, the company reached a deal to acquire EE, the U.K.'s largest mobile-network operator, with over 30 million customers. hese ADRs are a timely selection for the year ahead. A healthy dividend, which management aims to increase 10%-15% next year, is another attraction.
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STRENGTHS
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Market position created favorable competitive environment
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Broadband based services Improved profitability
WEAKNESSES
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Administrative proceedings
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Significant pension deficit
THREATS
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Corporate spending to remain sluggish
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Strategic changes expose the group to additional risks
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Stringent communications industry regulations
OPPORTUNITIES
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Positive outlook for managed network IT services
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Growing demand for high speed broadband services
Positive outlook for video conferencing and telepresence markets
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Growing traction for HD voice services to provide significant opportunities
The above report is for information purposes only, and is not a solicitation or offer to buy or sell any securities. Past performance is no guarantee of future performance. Neither diversification nor asset allocation ensures a profit or guarantees against loss. Before investing, investors should consider their risk tolerance, investment objectives, time horizon, available capital, and charges and expenses.
The information presented in this report has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guranteed. All material is subject to change without notice. The views and opinions expressed are those of Focused Stock Research and/or WALT ST Investment Management, Ltd. and in no way reflect the views and opinions of Investment Consultants nor their Broker Dealers.
