Blue Chip: BT hits the right buttons

A LITTLE over a year ago, this column suggested a new dawn for BT, writes Richard Phillips. Long assessed on its downside, "the upsides are only just appearing," it said. With hindsight, that foretold a change in perception of the company. No longer is it seen as a dull utility; its attempted link with MCI, although derailed by the bid from WorldCom, has shown it has the appetite to become a global player. It retains its stake in Concert, which is still expanding rapidly, though there is a need to secure another US partner.

The collapse of the MCI deal provided the added irony of BT as a takeover target. Needless to say, the shares have been romping away, although to see BT as a target may be stretching a point; much of the rise is down to an overall rerating of the telecoms sector. Finally, the windfall tax is a fading memory; the regulator has had to ease up as genuine competition enters the UK market.

BT has also been astute in forging links with New Labour, which has already started to pay off. The exciting world of multi-media is opening up for the company, in part thanks to this.

More recently Sir Peter Bonfield, the chief executive, has pledged to carry on the battle for global supremacy with pounds 1bn to be invested in Europe over the next three to four years. There is also much potential left in mobiles: BT has its stake in Cellnet and hopes to find more European licences in a sector growing at 20 per cent a year. Organic growth, especially from its core UK base, may be pedestrian - perhaps no more than 3 to 4 per cent a year. But overall, BT has lots going for it. Buy.