HSBC reiterates Buy on BT Group, hails victory of common sense over Ofcom

For analysts at HSBC, the compromise reached between BT Group and Ofcom was a victory for common sense and lifted the threat against the company's control of its cash flows.

Ultimately, BT retained control over Openreach's Budget and capital expenditure plans, Stephen Howard and Adam Fox-Rumley explained, a pre-requisite for BT to retain control over its financial future.

So while Openreach would have full control of its assets, BT had explained that, "Openreach shall take the overall BT strategic framework into account in setting the strategy of the Openreach Division."

Furthermore, legally Openreach's assets would remain within BT Group, which implied lower pension contributions than if a transfer had been consumated.

Nonetheless, BT Group was still facing its Wholesale Line Review and it was absolutely essential that Ofcome maintain the 'status quo' as regards the pricing for both unbundled copper and wholesale fibre, the broker said.

That, the analysts said, was needed to maintain present levels of network investment from the many providers, especially Virgin Media.

Howard and Fox-Rumley reiterated their 'Buy' recommendation and 425p target on the shares of the telecoms operator.