BT share spiked higher on Monday, after news that the telecommunications company is preparing plans to defend a hostile takeover after the recent collapse in its share price. BT Group approached Goldman Sachs and Robey Warshaw to update its defence strategy after the company suspended its dividend for 2020 – 2021 and the shares dropped to ten-year lows. The company needs to preserve capital to offset the damage by the coronavirus crisis with new investments. BT Group will resume its dividend payments in 2021-2022 period.
BT capitalization has dropped to £10.68 billion, and now the company has become a takeover target.
BT Group reported for the year ending in March, a drop in pre-tax profit to £2.35 billion from £2.67 billion the previous year. Revenue also dropped by 2% to £22.9bn. The reduction in revenue, attributed to low margin business and the impact of new regulations.
BT launched a new business plan to modernize the telco operations and product line. The new plan involves massive spending and investing in the infrastructure of £1.3 billion, over the next five years.
BT Share Price Analysis
BT share is 6.16% higher at 107.90 after the stock started the trading session with a gap up that send the price to two-week highs. Today’s rally stalled at the 50-day moving average at 110.10. If the bulls break that resistance, then the next hurdle is at 113.38 the 100-day moving average.
On the other side, initial support for the share stands at 105.45 the daily low. The next support level for BT share to watch is at 101.20 the low from Friday’s trading session. More bids would emerge at 94.35 the low from August 3.