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Investors have placed a record £300mn bet against BT, as new chief executive Allison Kirkby comes under pressure to reverse the UK telecoms group’s declining share price.
Canada Pension Plan Investment Board and BlackRock Investment Management, along with hedge funds including AKO Capital and Kintbury Capital, have all bet against the FTSE 100 company, according to public disclosures.
Their aggregate short position of 2.79 per cent of the company’s shares is the biggest publicly disclosed bet against BT in percentage terms since Financial Conduct Authority records began in 2012, according to data provider Breakout Point.
The disclosed short bet is much higher than the average of seven European telecoms companies and equipment makers — Orange, Telefónica, Deutsche Telekom, Vodafone, Telecom Italia, Ericsson and Nokia — at 0.95 per cent, according to regulatory filings.
London-based Kintbury said in December that it was short BT, arguing the firm had “no growth” and combined a “high priced product with poor service”. Kintbury pointed to rising debt levels, questioned BT’s accounting practices and argued it may have to slash the dividend.
The FCA data only captures shorts equivalent to 0.5 per cent of the company’s shares, about £54mn, meaning there may be other smaller bets that are not public.
Separate data from S&P Global show that the proportion of BT’s shares on loan, a rough proxy for short interest, hit a record 14.9 per cent this month.
Some traders have suggested that the out-sized amount of shares on loan could be related to Patrick Drahi’s Altice UK; it has built a stake of almost 25 per cent in BT using a structure that may involve the lending of shares.
BT is investing £15bn in the roll out of full-fibre broadband across the UK but is facing competition from Virgin Media O2 and dozens of alternative network providers — or “altnets” — and in February said it would do worse than its target of 400,000 broadband line losses in its 2024 financial year.
BT last year in response to comments by Kintbury said it was “confident that we can support our progressive dividend and that we will see a material uplift in our cash flow once our peak full fibre build is completed in December 2026”.
Another priority area for Kirkby, who took over the top job in February, is BT’s business division, created from a 2022 merger of its enterprise and global units.
In November the division’s chief executive Bas Burger acknowledged previous promises of growth had “not all materialised”, and that it in the past was “slow to migrate away from legacy products” and failed to offset input costs, resulting in a decline in profitability and market share.
BT’s share price has fallen 29 per cent in the past 12 months as it grapples with high capital expenditure, intensifying competition from rivals and rising debt. The company is due to report its full-year results this week.
European telecoms groups have been searching for growth opportunities and spending billions on capital expenditure demands to upgrade their networks. Executives across the industry have called for changes to regulation to support investment and an increase in scale.
Other companies in the sector including Telecom Italia have also been targeted by short sellers recently, with funds taking a $1bn bet against the company in March.
The CPPIB has disclosed a £95mn short position against FTSE 100 company Vodafone, having shorted 0.5 per cent of its stock.
Kirkby, who has been on BT’s board since 2019, last month appointed a senior partner from consultancy McKinsey as interim chief strategy and change officer.
The telecoms group is also in the middle of a cost cutting programme, including an aim to cut up to 42 per cent of its workforce by the end of the decade.
BT declined to comment on the short interest. Altice declined to comment. BlackRock, CPPIB and Kintbury declined to comment. AKO did not respond to requests for comment.
