BT shares hit a one-year high

(Image credit: Getty Images)

published 26 June 2024

BT shares hit a one-year high recently after Mexican billionaire Carlos Slim bought a 3% stake through his family holding company, says Leah Montebello in This is Money.

Slim is the “latest high-profile investor”, alongside billionaire telecoms tycoon Patrick Drahi and Germany’s Deutsche Telekom. The backing from one of the world’s richest men may be seen “as a vote of confidence” in CEO Allison Kirkby, with BT’s value now 20% higher since her arrival in February.

But Slim’s motives for buying are “unclear”. Kirkby’s “short-busting” strategy of upping BT’s dividend and making promises about its future free cash flow may have attracted Slim’s attention, says the Lex column in the Financial Times.

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Or he may be after “the stability of a utility’s cash flow”; it looks as if “group capital expenditure has peaked”. Either way, less affluent BT shareholders “might take heart from Slim’s interest”, given that there is “scant evidence that the doubters have taken flight”: BT’s return, including dividends, has lagged the FTSE 100 by 11% over a year. Slim’s investment also provides insurance against the possible departure of the “cash-strapped” Drahi, who owns nearly a quarter of BT.

Experts think that Slim’s investment is most likely to be “an opportunistic strategic investment aiming to capitalise on BT’s still fairly depressed share price”, says James Warrington in The Telegraph. But it could also be “a beachhead to taking a stronger position” in the stock. He has been behind failed takeover bids at Dutch telecoms firm KPN, Telecom Italia and Portugal Telecom.

What’s more, it is only the latest example of a foreign billionaire “snapping up shares in British telecoms giants such as BT and Vodafone”. At the very least, this “string of foreign billionaires on share registers means change could be on the horizon – and bosses will have to be on their guard”.

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Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

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