Shares digital

A shock profit warning from US telecoms giant AT&T (T:NYSE) has shareholders in BT (BT.A) looking over their shoulders ahead of the third-quarter results from the UK’s leading telco, which are due on 7 February.

The shares of BT have slumped from 325p to 277p since last November’s interims, when disappointing progress at IT services arm BT Global badly knocked sentiment.

BT Wholesale, which supplies products to other telecom companies for resale, has also come under pressure of late, and while AT&T’s warning of softness in revenues from consumers should not have a direct impact on BT, analysts will nevertheless subject the Retail unit’s results to close scrutiny.

After a 21% rise in 2007, when the sector was the seventh overall best performer, Telecoms has stalled in 2008 and so far offered a 0.6% decline. But even this means the sector ranks sixth out of 47.

Shares says: The sector’s defensive qualities and juicy dividend yields should mean it remains a safe haven.

Buy Vodafone (VOD)

Buy Cable & Wireless (CW.)

Hold BT (BT.A)

by: Russ Mould