Duelling Fools: BT

Stuart Watson

By

Stuart Watson

Published in Investing on 7 October 2009

Two Fools battle over the future for BT.

After looking at more general issues in recent editions of Duelling Fools, we now turn our attention to BT Group (LSE: BT-A), one of the most widely held shares in the UK. 

The telecoms outfit can trace its roots back to 1846 but only joined the stock market in late 1984, with further privatisation issues taking place in 1991 and 1993. Since then we've had the multi-billion pound 3G licence payment, the demerger of O2, a bumper £6bn rights issue and the current problems with its Global Services division. 

BT currently trades at around 130p, but are you bullish or bearish on its prospects?

 

Result of our last duel

Last time we asked which tax-free scheme you preferred -- ISAs or pensions. And it was ISAs by a country mile with 65% of the vote, while pensions mustered a measly 21%.

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Comments

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jonathanheenan3 07 Oct 2009 , 12:15pm

In one word, skype. I pay £30 a year for skype to have a landline number, voicemail and free calls throughout Europe. I have to pay BT £11 a month but for how much longer? before my landline I had mobile internet which I plugged into a little box that made my home wifi. Unfortunatley it was a little slow. However if this is fast enough in 3 years time why would anybody need a landline? BT's broadband is twice the price of O2 and other suppliers.

The bottom line is this. It is highly debabtable if BT will have a business in 10 years time. therefore I'm out!

directronics 07 Oct 2009 , 12:42pm

I have been trying to get away from BT for years. I have recently managed to do so with my line rental having had my calls via a company called Euphony. Free calls in UK at all times (not just after 6 and weekends) and free calls to 28 coutries all for a small monthly fee. Now line rental and broadband much cheaper than BT.

I agree, BT will be out of business in a few years (hopefully, too many UK residents being 'ripped off') so I join the out group!

stevejones13 07 Oct 2009 , 12:55pm

I am a great fan of Skype too - but concerned about the sale by EBay and the copyright infringement lawsuits. Long may Skype continue, but current ownership struggles make future uncertain right now.

PeterM200 07 Oct 2009 , 2:07pm

The telecoms outfit can trace its ROOTS back to 1846, not ROUTES! Routes are for buses.

Should have sold my BT hsares years ago, but at least I ditched their phone service in favour of Virgin Media.

supersol42 07 Oct 2009 , 2:25pm

Tell Sid.

dors01 07 Oct 2009 , 2:28pm

The cost of hardwired internet/phone connections for users is low currently but it cannot stay low because of the cost of materials and labour involved.
The answer is wireless phones and internet for the future, BT will be bought out within 2 years and homes and business's will start shifting to wireless solutions because prices for these will drop and customers and suppliers will benefit.
Look at it this way; wireless does not require as many engineers to install hardware in so many places and capacity is easily upped

directronics 07 Oct 2009 , 2:32pm

And 'shares' should not be dyslectic!

chigsk 07 Oct 2009 , 2:34pm

Yep WHEN mobile internet gets a lot better, why will I be paying for a BT line and broadband. It's a while before mobile broadband will get faster and reliable but once, that is sorted with a reasonable usage limit, bye bye BT

rodgoth 07 Oct 2009 , 2:40pm

i left BT 2 years ago.
get land line, broadband and low/freecalls for 14.99 month.
if i want to make more daytime calls (retired now)then i pat 3.6p pmin.
bt cannot match that.
rodders

MigginsPies 07 Oct 2009 , 3:27pm

Sadly mobile internet will not 'get better' as mobile/wireless bandwidth is inherantly limited compared to fibre/cable.

Rumblebum 07 Oct 2009 , 3:49pm

If I remember correctly when cable operators came on the scene and DESTROYED the countries pavements and scarred the landscape of our towns and citys with the backfill of their cable trenches which remain years later, poor old BT were forbidden to use optical fibre and had to let all the emerging telecom companies have free reign on their wires and exchanges to encourage competition.

Successive governments have just let all the other companies rip the heart out of BT by forcing them to sublet their lines at rediculous rates that enabled the competition to UNDERCUT ALL of BT services.

BT has been forced to spend billions to improve their systems to enable others to provide broadband and phone services cheaper than thier own.

But what realy annoys me is moving their disgusting customer service centre to India.

ALL the Indians have an arrogant Im in charge attitude and dont give a fig about anyones problems.

THAAT IS THE WORST THING THEY COULD HAVE DONE.

Sungeipatani 07 Oct 2009 , 5:55pm

I have always found the staff in the Indian call centres polite and very helpful who have gone out of their way to try and solve any problems. I have certainly not found them arrogant. The only issue I have had is that their accents are sometimes difficult to understand.

It is quite true that BT were not allowed by the privatisation legislation to take place in the original cabling of the UK (with fibre)and they have had to subsidise their competitors. Now that there is established competition in the UK telecommunications industry these restrictions on BT are coming to an end which can only help their margins.

With regard to mobile internet; this will always be limited due to the laws of physics (bandwidth) and BT takes a slice of all the traffic anyway because the majority of that traffic runs over the BT infrastructure networks (fibre).

I see BT as a very sound long term investment.

TMFBoing 08 Oct 2009 , 5:16am

Hi Folks,

Just a comment on mobile internet replacing fixed lines - wireless signals only go through the air for a very short distance, and as soon as they reach an appropriate cell, they get routed down the wires, which account for by far the largest part of the journey.

So it's impossible for wireless connections to replace cables, other than, of course, for the 'last mile' - the wired networks (and the owners of the wired networks) are vital for wireless communications to work.

Best,
Alan

Paullypips 09 Oct 2009 , 8:15am

I am a telecommunications engineer and I worked for BT for many years. Since leaving BT I have worked for many other carriers and re-sellers.
Whilst BT has its faults, it can never be truly competitive in retail domestic phone lines. Whatever price BT sets becomes the benchmark for other companies to beat.
All telecomms businesses use BT somewhere in their network, so when you buy a product from Carphone Warehouse, for example, you are buying a re-badged BT line and BT are being paid by Carphone Warehouse.
BT owns the majority of the telecomms network of the entire country, and as such should be a "cash cow" for the foreseeable future. Whether BT's management mess it up with their ridiculous plans to borrow a fortune and buy up the telecomms firms of the world is another matter.
In my opinion they would serve us all better by concentrating on improving domestic services first. However, they were prevented from doing this in the past by political interference from Oftel/Ofcom.
I own BT shares (bought with my own cash) and intend to hold them long term. So far they have been an excellent investment.

1ejthedj5387 09 Oct 2009 , 9:38am

Blue Chip -excellent investment -it was for my son who I paid £365 for his shares 2 years ago as they are now worth £130 , where do some peoie get their investment strategies form???
BT still try to give share holder deals - I am one and I see someone paying £11 a month why then am I paying £12 ?????So much for share holder privelages.
I see one contributor, obviously Indian, stating how good the call centres are -they are in fact pathetic , how will he like it down the line when Indian IT is on top but outsourcing cheap labour out to 3rd world countries in 2050 like the UK !!just to make more profit -not suporting its own countries employment.
When my aged father wasn't answering thephone as usual I finally was able to bypass a stupid & naive call center assistant to get a real British supervisor who understood the situation and followed up to find that after a turn he had left the phone off the hook .
So the BT Brits can still do a job for my money.

On the point that wireless means less BT engineers means more profit for BT , I agree. I watched the farce whent BT paid off pensionable employees and gave them lucrative BUT consultancy based contracts -- then stared laying them off as they didnt need them - this is management at work at least . Lamentable tho' the demise of BT is its definitely losing its privelaged grip . Watch out for ROYAL Mail !!!

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