Could a revised strategy catalyse the BT Group plc share price?

Does BT Group plc (LON:BT.A) (BT.A.L) offer an improving financial outlook?




BT Group plc
BT Group plc

The BT Group plc (LON:BT.A) (BT.A.L) share price has enjoyed a period of improved performance in recent months. Since reaching a low of 203p in May, it has risen to around 260p.

One reason for this, in my view, could be its revised strategy. The company has laid out plans for significant cost reductions which include a major headcount reduction. It will also focus on consumer growth and in the quality of the service it offers as it seeks to re-energise its top and bottom lines.

Of course, the company has made a number of significant changes to its business model in the last few years. For instance, it has acquired EE in order to expand further into mobile and become a more dominant quad play operator. It has also invested heavily in areas such as sports rights and pay-tv as it has aimed to keep pace with rivals.

However, BT has been unable to deliver EPS growth in spite of major spending initiatives. Now, though, it seems to be delivering on its current strategy in my opinion. Its most recent quarterly results showed that the company has been able to shed 2,000 job roles and seems to be making progress with the implementation of its wider strategy.

In future, if it is able to continue to accurately execute the current growth plan, I feel that it could deliver EPS growth. It may take a number of years to achieve this, since falling EPS is expected in the next two years, but I feel that a more efficient business which can respond to changing market conditions may emerge.

Under a new CEO, there could be further changes ahead. However, I feel that investors are backing the current strategy – as evidenced by its rising share price. Therefore, I feel cautiously optimistic about the prospects for the BT share price, although volatility could remain high in the near term.




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