Interactive Investor

ii view: new BT CEO shares bad news on broadband exodus

Rolling out new fixed and mobile ultrafast data networks and offering an attractive dividend yield. Buy, sell, or hold?

1st February 2024 11:41

Keith Bowman from interactive investor

Third-quarter results to 31 December

  • Adjusted revenue up 3% to £5.3 billion
  • Adjusted profit (EBITDA) up 1% to £2 billion
  • Full-year guidance unchanged

Chief executive Allison Kirkby said:

"BT Group has delivered another quarter of revenue and EBITDA growth, while rapidly building and upgrading customers to our full-fibre broadband and 5G networks, and we continue to be on track to achieve our financial outlook for the year.”

ii round-up:

BT Group (LSE:BT.A) today detailed sales and earnings broadly matching City estimates as its new chief executive Allison Kirkby took charge. 

Strength at its consumer division, and including product price rises, helped offset weakness at BT's business division due to factors such as higher input costs. That helped drive overall third-quarter sales up 3% year-over-year to £5.3 billion and adjusted profit (EBITDA) up 1% to £2 billion. 

Shares in the FTSE 100 company were briefly up over 5% in early UK trading, but by lunchtime had drifted back to where they started.  BT shares rose by a tenth in 2023, while rival Vodafone Group (LSE:VOD) fell by close to a fifth and the FTSE 100 index improved by almost 4%. 

Allison Kirkby, BT's new boss and the former CEO of Swedish telecoms company Telia Company AB (OMX:TELIA), reconfirmed the company's full-year 2024 financial expectations, with its focus on the build and rollout of its full-fibre broadband and 5G networks. 

Its full-fibre broadband network now reaches 13 million UK premises with the initial build to a further 6 million premises underway. 

The full-fibre customer base now totals 2.4 million, up 46% from a year ago, and made up of 2.3 million retail consumers and 0.1 million business customers. 5G connected mobile phone customer numbers rose 30% year-over-year to 10.3 million. 

Annual results are due on 16 May. 

ii view:

BT operates across the three divisions of consumer, business and Openreach, with the latter managing its networks including mobile phone masts and physically connecting homes and businesses across the UK. Brands for the consumer division include BT itself, EE and Plusnet. Openreach manages both its existing copper phone line network and its ongoing fibre broadband rollout across the UK. Group aims include simplifying its products and services and being the market leader in both fibre and 5G mobile communication networks.

For investors, competition from rivals remains intense, with customer broadband losses expected to exceed 400,000 this financial year. Openreach broadband lines losses were 369,000 in the first nine months to 31 December, about 2% of the total. 

Fibre broadband and 5G investment costs are being swallowed, corporate customers are looking to reduce their own costs including those for communications and IT services, while group net debt as of late September of £19.7 billion compares to a current stock market value of around £11.2 billion.  

On the upside, the new chief executive may well look to inject renewed vigour back into its strategy. Costs also remain a high focus, with job cuts planned following its fibre rollout. Investments in artificial intelligence are also expected to eventually lower costs such as those for customer service, while a major share stake held by telecoms dealmaker Patrick Drahi arguably generates speculative interest. 

A consensus analyst estimate of fair value above 185p per share, price/earnings ratio of 6 and forecast dividend yield of over 6%, suggest the balance of risk/reward is favourable. However, for many years the share price has struggled to sustain any recovery, almost magnetically drawn to the 100-110p region. The new CEO has quite a job on their hands to alter this trend.


  • Expanding fibre broadband and 5G network
  • Attractive dividend yield (Not guaranteed)


  • Intense industry competition
  • Subject to regulatory rulings

The average rating of stock market analysts:

Strong hold

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