Friday, November 05, 2004

Shareholders 1, stakeholders 0?

I see from my ever-oppressive rolling headlines on Reuters newswire that a large bank has upgraded BT to 'buy' and raised their price objective to a level which implies 14% upside from current levels. The thesis seems to be that the dividend payout can double over the next five years. I don't see that much dividend growth, but I don't want to split hairs over tedious forecast assumptions, because I can't think of any five year forecast (my own or anyone else's) that I feel particularly confident of in the current environment.

From where I sit the lack of visibility in the sector is overwhelming and seems to be growing moreso, based on a few meetings I have had this week with some very straight-speaking people in the industry (notably not the incumbent industry). Anyway, who's the bigger fool? The share price is up 2.5% and investors can cheer a higher yield.

Perhaps small investors can use some of the extra cash to subscribe to Netvigator or Telabria when they roll out in the local area, because the price per bit is probably going to be lower, the bandwidth upgrade path is probably going to be steeper and faster, and they could cut the cord - except that this would threaten their dividend flows if a significant number did so.

This post from the ever-excellent Telepocalypse says it all in highlighting the macro consequences of broadband policy (or the lack thereof), and made my eyes water, though not from laughter. It's no joke. The interests of the capital markets and social/economic policy are on a collision course (I have previously given a few examples like Utopia and this one closer to home), and the tabloid-reading segment of the UK would no doubt be agitated to see a feature on the French DSL market in The Sun (headline "UK BroadBland - how can we stand by and let the French, of all people, beat us in technology?").

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