BT share price graph

If there was any need for further evidence for the need for a BT break up, this week’s events provided it conclusively.

The investment argument is clear – a separate Openreach is a reliable and steady performer with a UK network position that is very unlikely to be eroded any time soon. In contrast, the associated business of BT Group, and particularly Global Services, represent a high degree of risk, as demonstrated in trumps (whoops, maybe not the best word to use these days) by the “Accounting Errors” at the Italian operation.

We have been here before. In 2008, BT Global Services announced a “shock” profits warning, requiring Hanif Lalani, the CFO, to be parachuted in to sort out the mess. https://www.theguardian.com/business/2008/nov/01/bt-telecommunication-shares-recession-crunch

The issue then was an over-optimistic accounting treatment for large contracts. It would appear the lessons from 2008 have not been learned.

It is time for BT’s shareholders to insist the group is broken up. I would guess the “sum of parts” is anything up to a £1 per share more than the current share price.