BT’s share price is up 4% this year
Jthe BT group [BT] The share price has risen more than 4% this year to around 180p as of July 25, outperforming the FTSE 100, which is down around 2.7% year-to-date. That said, the telecommunications stock remains well below the 52-week high of 201.40p it hit in February. The results of the first quarter of the group, expected on July 28, can they give a boost to the action?
BT looks to build on strong annual results
BT said adjusted EBITDA rose 2% to £7.6bn in the year to March 31 as a 2% drop in revenue to £20.9bn was reported. compensated by “lower costs of modernization programs, strict cost management and lower indirect commissions”. , according to a statement from the company.
These savings helped to boost reported pre-tax profit by 9% to £2bn, but after-tax profit fell by 13% to £1.3bn, mainly due to a tax bill deferred.
Commenting on the annual results, chief executive Philip Jansen said that, despite the difficult economic outlook, BT “continues to invest for the future”, adding that he was “confident that BT Group is on the right track”. This investment included capital expenditure of £5.3bn, up 25% year-on-year as the company increased spending on its fiber infrastructure and mobile networks.
After suspending payouts to shareholders after the pandemic hit in 2020, the group reinstated its annual dividend as scheduled, paying 7.7p per share.
BT’s reintroduction of its dividend could help rehabilitate the FTSE 100-listed company’s reputation as an income stock. BT’s potential as a growth stock certainly seems somewhat limited – the shares last broke above the 300p level in 2017. Nonetheless, the 52-week high mentioned above by just over 200p may imply upside potential.
According to the Financial Times ranking of 24 analysts offering 12-month price predictions for BT’s share price, the average target price was 220p, which is up 24% from the closing price on the 22nd. July of 177p. Of these analysts, three rated the stock as “buy”, nine “outperform”, eight “hold” and only four gave it an “underperform” rating.
BT’s near-term ability to make share price gains will depend in part on the company’s ability to meet its own guidance, with management saying it expects revenue Adjusted and EBITDA for the year to March 2023 increased year over year.
Increase in income linked to inflation
Inflation is expected to increase revenue per customer as BT raises prices in line with the Consumer Price Index (CPI), plus around 4%.
With a CPI above 9%, BT customers could see their bills rise by 13% this year, although low-income people have been told their fares will not rise.
BT Sport joint venture gets green light
Although the rising cost of living may see some consumers abandon pay-TV channels, BT was boosted this month by news that Britain’s competition watchdog, the Competition and Markets Authority (CMA ), had approved the merger between BT Sport and the sports channels owned by Warner Bros Discovery [WBD].
The deal will combine BT Sport with Discovery’s Eurosport in Britain and Ireland, allowing BT to share the Premier League broadcast rights bill. The merger, which was agreed between BT and Discovery in May and cleared by the CMA in July, will now be completed within the next few weeks, according to a statement from BT. BT Sport and Eurosport will remain separate brands initially, before being united under one brand at a later date, the statement added.
Broadband and 5G deployments remain essential
A key pillar of BT’s revenue growth plans this year is its broadband deal with the UK government. BT aims to roll out full fiber broadband to 25 million UK homes by 2026. The project will see the company qualify for government incentives to deliver faster internet connections across the country, giving BT a guaranteed return on investment.
BT said in its year-end statement that its rollout of broadband fibre-to-the-premises (FTTP) reached 7.2 million properties, with 750,000 premises served in the fourth quarter at an average pace of more than 58,000 locals per week. Meanwhile, the group’s EE mobile network has again been named the UK’s best 4G and 5G network operator by industry body RootMetrics, as EE’s 5G network has expanded to cover more than 50 % of British population.
An update on the progress of broadband and 5G expansion is likely to be among the main items of interest when BT announces its first quarter results at 7am on Thursday July 28.
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