Where next for BT Group plc after today’s half year results?

Could BT Group plc (LON:BT.A) (BT.A.L) offer improving share price performance following today’s news?


BT Group plc (LON:BT.A) (BT.A.L) has released half year results today. In my view, they show that it is making progress with its strategy in what remains a competitive market.

Reported revenue for the period was 2% down, while adjusted revenue was 1% lower. Growth in its consumer business was offset by regulated price reductions in Openreach, as well as declines in its enterprise businesses.

Reported profit before tax and adjusted EBITDA both moved 2% higher. They were mostly driven by higher volume and mix of high-end smartphones in the consumer business, as well as restructuring-related cost savings.

BT has now recorded nine quarters of successive improvement in customer experience metrics. In the first half of the year its net promoter score increased by 3.6 points, while Right First Time moved 2.7% higher. Its plans to reform its operating model are on track, with its restructuring programme having removed 2,000 roles in the first half of the year.

The company’s mobile churn rate remains low at 1.2%, with fixed churn increasing to 1.6%. This reflects the impact of recent price increases. The company has maintained its overall outlook for the full year, with it anticipating EBITDA to be in the upper half of its £7.3-£7.4 billion range.

In my view, the performance by BT in the first half of the year has been relatively encouraging. It is a time of significant change for the business, and it seems to be progressing with the implementation of its new strategy. Further cost reductions could aid its profitability over the medium term, while creating a more efficient and flexible business.

A new CEO is due to start work in the early part of 2019. This could lead to further changes in my opinion, although the current strategy could deliver a stronger business in the medium term. While the stock may remain relatively unpopular among investors in the near term, and volatility could be ahead, I’m cautiously optimistic about its long-term turnaround potential.

About Robert Stephens 5151 Articles
Robert Stephens is a CFA Charterholder and an Equity Analyst by trade. He is a passionate private investor who has been buying and selling shares for many years, owning a wide range of UK shares in the process. He has written for Citywire and The Motley Fool US and now runs his own business. To contact Robert, please email [email protected] or use one of the other contact methods available on the 'Contact Us' page