Analysts at Barclays warn economic woes could hit telecoms group's corporate business
As markets move higher, BT is missing out on the buoyancy.
The telecoms group is down 2% - a fall of 4.4p to 214.3p - after analysts at Barclays moved from overweight to equal weight and cut their price target from 260p to 230p. The bank warned the poor economic environment was likely to have an effect on BT's corporate business, and its recent move into sports broadcasting as it won a package of Premier league matches would increase its cost base. Barclays said:
BT investors have ridden a wave of buoyant fixed line market and cost cutting which has provided three years of material earnings growth and share price outperformance.
Some of these themes are set to continue into 2012 - cost cutting and line rental increases - but we believe a worsening macro environment will negatively impact the 50% of BT that is corporate, causing an increasing drag on growth and risk to the revenue outlook.
Overall investors were in cautiously optimistic mood at the start of the week, helped by suggestions Spain could finally bite the bullet and ask for a bailout which would reduce its borrowing costs. There is also the expectation that Greece's tortuous negotiations with its international creditors might also be coming to a conclusion.
So the FTSE 100 is up 19.05 points at 5812.37, with banking shares leading the way on hopes of a resolution to the Spanish situation. Lloyds Banking Group is 0.565p higher at 40.265p while Standard Chartered has added 20p to 1447.5p.
But Royal Bank of Scotland has fallen 1.9p to 269p following Friday's news that Santander had pulled out of buying a chunk of the bank's branches, and despite suggestions rivals such as Virgin Money could now step in.
Falling commodity prices on worries about global growth have hit the mining sector, providing a drag on the market. Kazakhmys is down 10p at 705.5p and Anglo American has slipped 16.5p to £18.08.
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