BT shares crash as Labour vows to nationalise broadband business
BT (BT-A.L) lost about £680m in value on Friday morning as investors reacted to the Labour party’s plans to nationalise part of the business
Shares in the telecoms company fell by about 3% in early trade, knocking almost a quarter of a billion pounds off its value. Shares were still down 2.2% after 45 minutes of trading in London.
Openreach is one of BT’s main businesses and provides telecoms infrastructure across the country. The division maintains telephone wires and lays broadband cables not just for BT but other internet and phone providers too.
Openreach controls just under half of the entire UK market for fixed communications infrastructure and accounted for 10% of BT’s total revenues last year, bringing in £2.2bn.
“It should be a top political priority to super-charge the roll-out of full fibre broadband and 5G right across the UK so we can build the digital economy of the future,” a spokesperson for BT told Yahoo Finance UK.
“Whatever the result of the election, we’d encourage the next government to work with all parts of the industry to achieve that. It’s a national mission that’s bigger than any one company.”
Labour has ambitious and far-reaching plans for nationalising businesses. Other targets include utility companies, rail operators, and the Royal Mail.
Michael Hewson, chief market analyst at CMC Markets, said investors would now be scanning their portfolios to identify other businesses at risk of nationalisation under Labour.
“Companies like Royal Bank of Scotland, National Grid, Centrica, Severn Trent, Royal Mail as well as the rail company franchisees, like Go Ahead Group and National Express to name but a few, are already trading at a nationalisation discount,” Hewson said.
“For now, given Labour’s current polling numbers the concern is fairly minimal, and investors will be hoping it stays that way, which helps explain the fairly muted share price reaction.”
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