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FTSE edges higher after BT unveils broadband upgrade programme

Published 05/05/2016

The FTSE 100 Index rose 22.7 points to 6134.7 as traders were cheered by brighter corporate earnings
The FTSE 100 Index rose 22.7 points to 6134.7 as traders were cheered by brighter corporate earnings

The London market edged higher after BT unveiled a £6 billion programme to upgrade its broadband network and posted a jump in annual profit.

The telecoms giant was the biggest riser in the top flight after it said the upgrade would extend ultrafast broadband to at least 10 million homes and businesses and lay fibre optic lines to around two million premises across the UK.

The FTSE 100 Index crept up 5.2 points to 6117.3, as traders took only lukewarm comfort from sunnier corporate earnings after the market had suffered a gloomy start to the week due to downbeat forecasts for global trade.

In Europe, Germany's DAX rose 0.2%, while in France the Cac 40 fell 0.3%.

Positive corporate earnings in London were tempered by closely-watched Purchasing Managers' Index data from Markit, showing that the UK's key services sector has slumped to its lowest level in three years.

The survey said the sector has fallen to 52.3 in April, down from 53.7 in March. That is the weakest level since February 2013, and close to the 50-point mark that splits expansion from contraction.

The pound was a cent higher against the euro at 1.27, in the wake of the European Central Bank downgrading its inflation forecasts earlier this week for this year and next.

Sterling was little changed against the US dollar at 1.45.

Among stocks, BT was more than 2% higher, or 11.6p to 451.1p, after it also announced a 15% rise in pre-tax profits to £3.03 billion for the year to March 31 after seeing revenues rise by 6% to £18.9 billion.

BT's £12.5 billion acquisition of mobile phone firm EE was cleared by regulators in January.

BT chief executive Gavin Patterson said: "We now see the opportunity to deliver more synergies than we originally expected, and at a lower cost."

Supermarket Morrisons was also a strong top flight riser after it said like-for-like sales grew 0.7% in the first quarter of the year as the retailer's turnaround under chief executive David Potts continues to gain traction.

The results represent the second consecutive quarter of growth at the grocer after four years of stagnation.

The company saw sales at its Food To Go division rocket more than 17% year-on-year, and Morrisons said its Free From range sales grew 70%.

Shares lifted 4.5p at 192p.

Shares in British Gas parent Centrica were the biggest faller in the FTSE 100 Index - diving 10%, or 22.6p at 208.5p, after the utilities firm announced a surprise share sale to raise funds.

It said it would sell 350 million shares, worth between £750 million to £800 million, to buy a pair of smaller rivals and cut debt.

Analysts at Jefferies said: "Raising equity is an expensive way of paying down debt."

The biggest risers in the FTSE 100 Index were BT up 11.6p at 451.1p, Pearson up 20.5p at 805p, Next up 130p at 5280p and Morrisons up 4.5p at 192p.

The biggest fallers in the FTSE 100 Index were Centrica down 22.6p at 208.5p, Inmarsat down 67p at 863p, Sage Group down 22p at 582p and Smith & Nephew down 32p at 1132p.

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