BP’s best bet to avoid an unforeseen tax could be to hide Bernard Looney on an offshore oil platform for several months. Every time the CEO enters the tax and investment territory, he inflames the policy around the debate on contingencies.
Luni’s memorable remark last November – which he must regret – was the boast that BP was an “ATM of this type of price.” Oil prices at the time were $ 85 a barrel, so the $ 105 extra profit had to be taken into account when it stemmed for most of Russia’s war in Ukraine.
Then, a few weeks ago, it was acknowledged – reiterated at a shareholders’ meeting on Thursday – that an unforeseen tax would not change a single iota of BP’s plan to invest £ 18 billion in the UK for the rest of the decade. This line invited outsiders to wonder if BP could make an average of more than £ 2 billion a year. The UK’s need to invest in energy security has suddenly become more urgent, so it is fair to ask whether BP has also increased its ambition. If an £ 18bn item is a boost to previous plans, the company has not identified it.
In that context, another of Luni’s comments on Thursday read almost like an invitation to the government to fight hands. “By definition, unforeseen taxes are unpredictable and can trigger domestic energy investments,” he said. Does this mean that BP can invest more, but won’t it if the government takes the path of unforeseen profits? If this is the case, Rishi Sunak, the chancellor who says he is in a “pragmatic” regime, is almost obligated to emerge victorious in some way from this small confrontation.
The strange thing about the whole debate, as stated here more than once, is that we are not talking about huge sums. In BP’s case, an increase from 40% to 50% of the tax rate on profits in the North Sea this year would mean a payment of £ 250 million on the projected £ 1 billion at the regular rate. For a group that is currently spending £ 1 billion plus a quarter on share buybacks, a quarter of a billion is not a change in the game.
Yes, every one-time tax can be called “unpredictable”, but come on, it’s not as if the extra taxes under extremely favorable trade conditions are unheard of. Other European countries are already doing so. While they only happen once a decade, which is the UK average recently, the local fiscal regime will look stable. Luni’s melody is not convincing.
BT is finally focusing on the main event
Against the backdrop of falling stock markets and unbound “stable” coins, BT offered a port in a storm on Thursday: shares rose slightly year-over-year and the final dividend was restored to the level previously announced.
The band even finally managed to film BT Sport, an endeavor that, according to you, was a futile project by its former CEO, Gavin Patterson, or a necessary blocking device to stop the loss of broadband customers in mid-2010
Or rather, BT will be half out of the sport. The creation of a joint venture with Warner Bros Discovery will result in BT receiving just £ 93 million in advance. The real money – up to £ 540 million – will have to come through profit taxes for four years if the important stages are completed. In a business that relies heavily on the renewal of sports rights, especially football rights, structure was probably inevitable. Perhaps equally important was the signing of an extension to the reciprocal supply deal with Sky; gives little certainty.
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BT’s main game these days is fast-paced, where today’s boss, Philipp Jansen, says Openreach is building “like a rage”. In hard terms, this means that 7.2 million rooms have passed, another 3 million will follow this year and then 4 million a year. Goldman Sachs analysts estimate that the rate is three or four times higher than competitors, so the thesis that BT should eventually exit its £ 15 billion spending program with two-thirds of the market fast fiber remains intact.
One critical driving force in the mix is how many customers actually buy advanced broadband. The absorption rate is currently 25%, which according to BT “compares well” with European deployments at this early stage. The ratio will be one that should be observed in the coming quarters, but at the moment BT seems to be on the verge of becoming the telecommunications equivalent of a slightly more exciting national network. There is no shame in this: this is roughly what BT has always been supposed to be. Football has always been a side show.
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