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BT Group update eyed after regulatory reprieve; legacy issues key for Barclays

Last updated: 01:00 28 Jul 2017 EDT, First published: 07:05 27 Jul 2017 EDT

BT worker with vans

A first-quarter trading update from telecoms giant BT Group PLC (LON:BT.A) will be the main focus on Friday as investors look for some reassurance after poor full-year results in May, having got some relief on the regulatory front earlier this week.

Back in May, the FTSE 100-listed company reported a 19% drop in full-year pretax profits and forecast current year earnings would be slightly lower.

READ: BT shares gain after Ofcom forced to revisit rules on broadband market

The group also said its dividend this year would be less than the 10% previously stated, so any update on the likely payout should be of particular interest to investors.

The latest figures come two days after the Competition Appeals Tribunal quashed rules set by regulator Ofcom last year for a new market in so-called ‘dark fibre’.

Ofcom had ordered BT to introduce a dark fibre product that would allow its rivals to install their own equipment to send signals along fibre optics rather than paying to use that provided by the company’s network subsidiary, Openreach.

The rules were set in place to improve competition and challenge Openreach’s dominance over the lucrative market of leased lines.

However, BT will no longer be required to launch a dark fibre product in October after the CAT ruled that Ofcom made an error in its definitions of the business market.

READ: BT Group to get shake-up when new chairman arrives believes Macquarie

Meanwhile Australian bank Macquarie said this week that it believes Jan du Pessis's arrival as BT’s chairman is likely to be the catalyst for a shake-up of the group’s management. Former Rio Tinto chairman du Plessis takes over the chair from Sir Michael Rake in November.

Macquarie has a 340p target price for BT and ‘outperform’ rating

Legacy issues key for Barclays

UK lender Barclays PLC (LON:BARC) continues the sector’s second quarter results season on Friday, although the actual numbers will likely be overshadowed by legacy issues like those of Lloyds Banking Group PLC (LON:LLOY).

READ: Lloyds reports biggest half-year profit in eight years but shares drop as PPI storm rages on

Last week, it emerged that Barclays and four of its former top executives will appear in court on 9 January 2019 to begin a trial on charges of conspiracy to commit fraud over deals made with Qatar as part of its £12bn emergency fundraising in 2008.

The bank’s chief executive Jes Staley is also being investigated by the UK’s Financial Conduct Authority for his attempts to unmask a whistleblower.

In terms of its financial performance, the lender made a good start to the year with its first quarter profit smashing expectations, and this should have continued.

Barclays has been undergoing a restructuring that has seen the bank offload its non-core businesses to focus on its core in the UK and the US.

Ian Forrest, investment research analyst at The Share Centre, said investors will be keen for an update of the progress of asset disposals and the streamlining of the business.

“Investors will also lookout for any improvement in its net interest margin and capital ratios as a sign of progress,” he said.

Significant events expected on Friday July 28

Interims: BT Group PLC (Q1) (LON:BT.A), Barclays PLC (LON:BARC), Equiniti Group PLC (LON:EQN), Essentra PLC (LON:ESNT), International Consolidated Airlines Group PLC (LON:IAG), IMI PLC (LON:IMI), JKX Oil & Gas PLC (LON:JKX), Laird PLC (LON:LRD), Morgan Advanced Materials PLC (LON:MGAM), Rightmove PLC (LON:RMV), UBM PLC (LON:UBM)

Finals: Clipper Logistics PLC (LON:CLG)

Trading updates: Gear4Music Holdings PLC (LON:G4M), Johnson Matthey PLC (LON:JMAT), Lonmin PLC (LON:LMI)

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