Investors bet record £300mn against BT

Investors bet a record £300mn against BT as the new chief executive Allison Kirkby is under pressure to reverse BT’s falling share price.

According to public disclosures, Canada Pension Plan Investment Board, BlackRock Investment Management and hedge funds such as AKO Capital and Kintbury Capital have all placed bets against the FTSE 100.

According to Breakout Point, the aggregate short position is 2.79 percent of the company’s stock and represents the largest publicly disclosed bet in percentage terms against BT since Financial Conduct Authority records began.

According to filings with the regulatory authorities, the disclosed short bet was 0.95 percent, which is higher than that of seven European telecoms and equipment manufacturers — Orange, Telefonica and Telecom Italia.

Kintbury, a London-based company, announced in December it was short BT. Kintbury argued that the telecoms group lacked “growth” and offered a “highly priced product combined with poor service”. Kintbury cited rising debt levels and questioned BT’s accounting practices. It also suggested that the company may be forced to cut its dividend.

The FCA data captures only shorts equal to 0.5 percent of the shares in a company, or about £54mn. This means that there could be smaller bets which are not publicly disclosed.

Separate data from S&P Global shows that the percentage of BT shares on loan this month, a rough proxy to short interest, reached a record 14.9%.

Some traders suggested that the large number of shares on loans could be linked to Patrick Drahi’s Altice UK. It has built a 25 per cent stake in BT by using a structure which may include the lending of share.

BT has invested £15bn to roll out full-fibre internet across the UK, but it faces competition from Virgin Media O2 as well as dozens of other network providers – or “altnets” – and said in February that they would fall short of their target for 400,000 broadband losses during the 2024 financial period.

BT responded to Kintbury’s comments last year by saying it was “confident” that they could support their progressive dividend, and that our cash flow would increase materially once the peak build of full fibre is complete in December 2026.

Kirkby’s priority for the business division of BT, which will be created by a 2022 merge of its enterprise and global units, is another area.

Bas Burger, the chief executive of the division in November, acknowledged that the previous promises of growth “had not all materialised”. He also said that the division had been “slow in migrating away from legacy product” in the past and failed to offset the input costs. This resulted in a decrease in profitability and the market share.

BT’s shares have fallen by 29 percent in the last 12 months due to its high capital expenses, increased competition and increasing debt. This week, the company will report its results for the full year.

European Telecom groups are searching for growth and investing billions in capital expenditures to upgrade their network. Industry executives have called for regulatory changes that will support increased investment and scale.

Short sellers have recently targeted other companies in the industry, including Telecom Italia. Funds bet 1bn dollars against the company back in March.

The CPPIB disclosed a £95mn (£95mn) short position against FTSE 100 Company Vodafone, after shorting 0.5 percent of its stock.

Kirkby, a member of BT’s Board since 2019, appointed a McKinsey senior consultant as interim chief strategy officer and change officer last month.

The group has also embarked on a programme of cost-cutting, with the aim of cutting up to 42% of its staff by the end decade.

Altice declined to comment. Altice declined comment. BlackRock, CPPIB, and Kintbury all declined to comment. AKO has not responded to requests for comments.