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?