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What’s next for BT’s share price?

FOR BT (BT.A), the telecoms giant that once held the monopoly on UK telephone lines, the changing times are proving difficult, there is no doubt. Growing competition in the race for dominance in UK broadband and 5G services has been a thorn in its side for some time now, with newcomers constantly nipping at its heels, taking market share and eating into its profits.

The newly merged Virgin Media O2 is a direct challenge for BT. As if that weren’t obvious enough, its chief executive, Lutz Schüler, openly warned BT that it “better be careful”.

And it’s not the only one. When Liberty Global and Telefónica agreed to merge in 2020, the aim was to create a stronger mobile and broadband competitor for BT in the UK. And then there are the dozens of privately-funded “altnets” all racing to take a dominant part in the nationwide rollout of faster, all-fiber networks.

This fast and furious competition is costing BT dearly, with billions of pounds invested in fiber and 5G. And the battle is far from won. It has earmarked a further £15bn to expand its fiber optic network, with plans to install it in 25m homes by 2025. However, Virgin Media O2 has similar plans and a potential joint venture with Telefónica and Liberty Global up its sleeve. , with the aim of providing connectivity to an additional 7 million homes by the end of 2027.

But BT has its own plans. He has already sold Sky to Comcast, taken TalkTalk private and installed new CEOs at Vodafone and Three. This king of the jungle does not lie down.

The next step in his plan is to rebrand BT. He will make the EE brand his flagship brand for consumers and says he will share more about his launch plans later this year. The BT brand will still appear on its standalone broadband and fixed services, while BT Sport will continue to broadcast sports, in a joint venture with Warner Bros. -broadband and fixed frills.

And of course there is also a cost of living crisis to deal with. Although analysts seem to think an inflationary environment shouldn’t trouble BT too much. In February, broker Berenberg raised its price target by 200p to 225p. Analysts say the price target increase is largely due to the fact that around two-thirds of BT’s revenue is inflation-linked. He also expects normalized free cash flow to increase by 23% by 2023.

JP Morgan also believes BT is well equipped to weather the current economic climate. It could increase its price target in July.

BT’s annual results are due Thursday.

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