Tuesday, 21 January 2020

BT shares spike as Conservatives win majority in UK election

by Harry Baldock, Total Telecom
Friday 13 December 19

Boris Johnson’s victory provides security against the threat of nationalisation from Jeremy Corbyn’s Labour party

The relief was palpable on the stock market this morning as BT shares spiked up 10% (206.8p), before stabilising at an 8% increase, as a result of the UK general election. National rivals Talk Talk also saw an increase of 7%.   In November, the Labour party shook the UK telecoms community with its announcement that it would part…

The relief was palpable on the stock market this morning as BT shares spiked up 10% (206.8p), before stabilising at an 8% increase, as a result of the UK general election. National rivals Talk Talk also saw an increase of 7%.
 
In November, the Labour party shook the UK telecoms community with its announcement that it would part-nationalise BT if they were to be elected. As part of this pledge, shadow chancellor John McDonnell vowed to provide free full-fibre broadband to every UK household, using funds garnered from taxing tech giants, including the so-called Big Four: Amazon, Apple, Facebook and Google. The proposed £20bn policy has been branded a ‘disaster’ for the sector by top industry professionals.
 
Now, as the Conservatives score the largest majority since the days of Margaret Thatcher, the fears presented by a Labour victory have been soundly assuaged.
 
“The Conservative result gives the industry certainty as to future ownership models and so BT and its competitors can breathe a collective sigh of relief,” said Matthew Howett, principal analyst at Assembly.
 
Supporting full-fibre broadband is also a key Conservative policy, with Johnson promising £5bn towards extending this technology to all homes in the UK by 2025. 
 
“There are lots of things for the new government to get done, few more important to the UK than speeding up the delivery of full-fibre broadband,” said BT chief executive Philip Jansen [pictured], imploring the new ministers to “cut through the red tape and help us build”.
 
Despite this election being what could be described as a victory for the telecoms industry, analysts are careful not to preach too much optimism to the UK market. BT still faces a tough year ahead, which is sure to impact share prices. Brexit turbulence looms on the horizon and Huawei’s future involvement in the UK’s digital infrastructure remains unclear, muddied by the ongoing trade war between China and the US.
 
The result of this election will certainly usher in turbulent times for British politics, but, at least for today, investors in UK telecoms companies can sleep a little more soundly.
 
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