Oh what fun!

BT denies it is sitting on a \’copper mine\’ worth £50bn

Tee hee. This all started with my piece for The Register.

But Friday when BT was faced with claims its copper wires could be worth £50bn – an attractive prospect for thieves – the company was forced to start furiously downplaying the value of its assets.

The furore began when Investec analysts asked whether BT was \”sitting on a potential copper mine\”, having picked up on an article in The Register, which estimated the value of BT\’s wires to be four times the company\’s market value.

Morten Singleton, an analyst at Investec, wrote in a note: \”We contacted BT investor relations, and they are not arguing with the maths, agreeing that BT does have some 75m miles of copper cabling and that using a £5,000 per tonne spot price for copper this could be worth circa £50bn. But BT suggests the cost for its extraction are entirely unknown, and there are all sorts of issues, regulatory and otherwise.\”

As I did in fact say, the copper just isn\’t worth that much.

OK, OK, yes, this isn\’t quite right. There\’s labour involved in digging up all that copper, not all of it will be 10 pair (some of it will be heavier, 25 pairs or 50 pairs), not all of a cable is copper and copper wire scrap doesn\’t get the LME price.

However, we do have one bloke who picks up on the important point:

However, Investec\’s original note still raised the interesting suggestion that BT\’s copper wires – certainly worth many millions of pounds – may one day be lucrative as scrap.

Mr Singleton wrote: \”As an academic exercise this raises an interesting point. While any current fibre-to-the-premise rollout is not replacing the copper cable, there will come a time when the copper is no longer required, and can be scrapped. Even if this takes 20 years, or more, it could arguably fund the deeper rollout of fibre of the network, or special returns to investors.\”

Yes, there is value to the copper that BT is sitting upon and it\’s not clear that that value is currently factored into the BT share price.

BTW, BT were not \”furiously denying\” anything. I talked to them before I wrote the piece. They knew the numbers I was using and we all knew they were over the top (which as you note, is what I actually said). But BT are just absolutely delighted that someone has drawn investors attention to this point. At least, I assume they are for they knew exactly what I was going to say and were happy for me to go ahead and say it.

Why wouldn\’t a company be happy to be thought of as more valuable?

4 thoughts on “Oh what fun!”

  1. That’s the first time I’ve seen a ‘spokesman’ speaking human. Refreshing change – no corporate speak and has a sense of humor.

    Tim adds: My not being a journalist, my being an opinionator more than anything, was put to one side on this story. I actually did some research! Phoned up BT! Checked my numbers with them!

    They laughed, said obviously The Register would love the story. And I can tell that it’s the same bloke I talked to who is responding there.

  2. Could be the biggest asset-stripping ever?

    And BT might not like it if they’re suddenly targeted for takeover by a Russian or Chinese metals company that wants to close the landline business, fire all the staff and dig up the cables.

    Bit of a bummer for the customers though; we’ll have to switch to mobile.

  3. Perhaps BT is adopting a “forbidden fruit” approach? Appear to deny it, and it’s more interesting and more believable.

    Or alternatively, the newspapers are misrepresenting for the sake of the story. The NZ Treasury had a problem with the media claiming that documents released under the Official Information Act were “leaked”. (Solution, print them on paper with a watermark on each page saying “Released under the OIA”).

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