BT shares jump as it dodges Labour nationalisation
Shares in BT jumped in early trading this morning as Boris Johnson’s thumping election victory staved off fears of nationalisation under Jeremy Corbyn’s Labour party.
BT shares spiked as much as 10 per cent to 206.8p before easing back down to an eight per cent rise as investors breathed a deep sigh of relief.
Read more: City reacts with shock to Labour’s plans to part-nationalise BT
Shares in rival telecoms firm Talktalk were also trading seven per cent higher on the election result.
Last month shadow chancellor John McDonnell shocked the City when he unveiled plans to part-nationalise BT if Labour got into power.
McDonnell also vowed to deliver free full-fibre broadband for every UK household, stating the £20bn policy would be funded through taxes on tech giants such as Amazon, Google and Facebook.
But the plans were roundly condemned in the City, with top industry figures warning the proposals would be a “disaster” for the sector and for the customers it serves.
“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,” Matthew Howett, founder and principal analyst at Assembly, told City A.M.
“We also know that Boris Johnson is a keen infrastructure builder which will encourage Openreach when it comes to the fibre build.”
Full-fibre broadband has been a key policy for the Conservative party, with Johnson pledging to inject £5bn in a bid to reach all homes in the UK by 2025.
BT chief executive Philip Jansen said: “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.
“Our new ministers can take some simple, immediate steps to cut through the red tape and help us build like the clappers. We’ve got 33,000 brilliant Openreach engineers ready to roll.”
Telecoms analyst Paolo Pescatore said there was a “sigh of relief” across the industry.
“But while this provides some short term optimism, BT still faces numerous challenges,” he said. “A tough year awaits the company which will impact the share price.”
Read more: Boris Johnson casts doubt on Huawei involvement in UK’s 5G network
Howett also warned that uncertainty will continue to hang over the telecoms sector until a final verdict is reached on the role of Chinese tech firm Huawei in the UK’s digital infrastructure.
“For that we will need to await details of the Brexit deal and the outcome of the ongoing trade war between the US and China,” he said.