Nomura sees regulatory headwinds on the horizon at BT, but stays at neutral

Sky´s aggresive customer retention efforts kept BT Group from accelerating the pace of broadband additions in the second quarter and there were regulatory clouds massing on the horizon, Nomura said.

The former neutralised BT´s marketing around the launch of its UEFA content, but the broker nonetheless remained positive on a medium-term basis.

Regulatory sentiment was set to turn more negative over the next year the broker pointed out, with Ofcom expected to kick-start its Fixed Access Market Review - which will look at unbundling, wholesale line rental and fibre regulation - by the end of 2015, analyst James Britton said.

The regulator was also expected to provide initial guidance on its CDR conclusions in the first quarter of 2016, with policies to suport competition in the access layer anticipated.

Regulatory headwinds were also expected to resume from fiscal year 2017, the broker added.

Offsetting the above to an extent, EE´s trading momentum was "welcome" and BT remained well positioned to benefit from converged services and and EE synergies over the medium-ter, Britton explained to clients in a research note sent on Friday.

The analyst kept his 490p target price on the stock and reaffirmed his neutral recommendation.