LONDON (ShareCast) - (Sharecast News) - BT Group tumbled on Tuesday after UBS downgraded the shares to 'sell' from 'neutral' and cut the price target to 120p from 146p, as it assumed a halving of the dividend amid free cash flow pressures.
"We think the market has underestimated the impact of rising interest rates and accounting changes at BT Sport that impacts free cash flow," the bank said.

"Without a dividend cut, BT Group will have to borrow more than £900m per annum over the next three years.

"Borrowing to fund both the dividend and pension deficit payments when the cost of debt is rising presents risks and we assume a halving of the dividend to 3.85p (from 7.7p)."

At 0940 BST, the shares were down 4% at 122.50p.

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