Focus on Vodafone And BT Group as CMA Approves Merger of Virgin Media and O2

Summary

  • UK regulator approved the merger between Virgin Media and O2′s worth up to £ 31.4 billion.
  • The regulator Competition and Markets Authority said the merger would not lower competition, citing BT’s Openreach as a player in the sector.

The British telecommunications sector is going to see an intense competition in the coming days as the nation’s competition regulator Competition and Markets Authority (CMA) approved Virgin Media and O2′s merger of £ 31.4 billion today (20 May).

There was a concern raised that the merger deal between the two would lead to deficient quality as well as a price increase.  CMA approved the deal as it said the merger would not lead to lower competition in the leased line market, adding there was sufficient competition from players such as BT Group’s Openreach.  

The merged entity will have a combined total of 46 million video, broadband and mobile subscribers and have revenues adding up to £11 billion as per a joint announcement made by the two companies in May 2020.

Let us deep dive, into two FTSE 100 listed telecom stocks with a five-year average dividend yield of over 6 per cent:

  1. Vodafone Group PLC (LON: VOD) 

FTSE 100 listed telecommunications giant Vodafone Group shares were trending today as one of the volume leaders in the FTSE 100 index with 46,067,888 shares being traded on the index as of 13:41 hrs GMT+1. The group recently announced its FY 2021 results, reporting a dip in revenues by 2.6 per cent to EUR 43.8 billion from the previous year, yet called the company’s performance resilient.

It’s Earnings before interest, taxes, depreciation, and amortization (EBITDA) fell by 1.2 per cent to EUR 14.4 billion. Meanwhile, its operating profit increased by 24.3 per cent to EUR 5.1 billion due to contribution from joint ventures and associates.

(Source: Refinitiv, Thomson Reuters) 

Vodafone Group’s shares were trading at GBX 127.10, up by 0.55 per cent while the telecommunications’ sectoral index stood at 3,074.19, down by 0.17 per cent on 20 May at 13:40 HRS GMT+1. The stock’s five-year average dividend yield was at 6.4 per cent, and its year-to-date returns stood at 4.91 per cent.

Also Read: Vodafone shares suffer 8% loss as group’s FY21 revenue dips over 2% 

  1. BT Group PLC (LON: BT.A) 

BT Group is a UK based multinational telecom company and is the largest provider of mobile, and other telecom services in the UK. The group’s stock was one of the other volume leaders in the FTSE 100 index, with 21,311,190 shares being traded today as of 13:41 HRS GMT+1. A few days ago, the chief executive of the company had increased its shareholding in the company by 1.25 million shares at a price of GBX 163 per share.

(Source: Refinitiv, Thomson Reuters) 

BT Group’s shares were trading at GBX 170.45, down by 0.90 per cent while the FTSE 100 index stood at 6,985.52, up by 0.51 per cent on 20 May at 13:43 HRS GMT+1. Its five-year dividend yield average was at 7.3 per cent and its year-to-date returns stood at 28.62 per cent.

Also Read: How BT Group’s Renewables Supply Deal with Total SE will Impact Its Climate Goals 

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