BT Group (LON:BT.A) is prepared for another pension slump as a new valuation of its pension fund is expected to indicate a £14 billion deficit, the Sunday Times reported. The news comes after the telecommunications company’s fourth quarter results last week, when the company announced plans to cut 4,000 jobs as it restructures its business and cancel the annual bonus of its CEO Gavin Patterson following an accounting scandal in his Italian department.
BT’s share price rose 2.72 per cent to 305.95 pence on Friday, closing better than the London market. The FTSE 100 index rose by 48.76 points, ending the session 0.66 per cent higher at 7,435.39. The Group’s shares lost more than 30 per cent of their value last year and have fallen by around 16 per cent over the year to date.
The Sunday Times reported yesterday that BT’s pension plan trustees were due to release their annual funding update within weeks, with analysts saying the deficit could have risen to as much as £14 billion by the end of June last year, compared with a £10 billion deficit in the same period last year.
While BT last week announced in its fourth quarter results that the pension deficit had widened to £7.6 billion at the end of March, the newspaper notes that the trustees are using a different method to calculate future liabilities. The forthcoming update will set the scene for a formal health check of the system every three years, starting in the summer.
The 20 analysts offering 12-month price targets for BT in the Financial Times have a medium target of 372.50 pence, with a high estimate of 450.00 pence and a low estimate of 270.00 pence. As of May 12th, the consensus forecast of the 22 investment analysts surveyed covering the former telecoms monopoly advises investors to maintain their position in the company.
On Monday 15 May at 08:00 BST, BT Group plc’s share price was 305.95 pence.