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The BT Group (LSE: BT.A) share price spiked on the back of 2024 results, and they’ve kept on climbing.
On 16 May 2024, CEO Allison Kirkby famously told us the company had “passed peak capex on our full fibre broadband rollout and achieved our £3 billion cost and service transformation programme a year ahead of schedule.”
After that, the BT share price kept on going to hit a recent peak of 224p — for a 113% gain since that key date. But in the past couple of months we’ve seen a 10% fall. Is the bull run over?
Another solid year
When it came to 2025 results we heard yet more upbeat talk. This time the boss reported “strong progress against… strategic priorities in FY25.” And she spoke of “new record build and connect highs,” saying “our full fibre network now reaches more than 18m homes and businesses, with more than 6.5m already connected.”
For years I’d worried about BT’s ability to keep its ambitious dividend policy going. Capital expenditure can use up vast amounts of cash. And net debt — £19.8bn at March — doesn’t help the cash situation either.
But BT once again lifted its full-year dividend, albeit by a modest 2%. It means we’re looking at a forecast 4% yield now. That’s far from the biggest on the FTSE 100. But if BT can keep it progressing steadily, it could compound to a tidy sum in 10 or 20 years.
Investor disconnect
So what triggered the recent investor turn-off? The dip commenced following BT’s July trading statement.
This time it wasn’t full of quite the same gushing enthusiasm, though the CEO did say “we’re on track to deliver our targets for this year, next year, and the end of the decade.“
But we saw a 3% drop in total revenue. And though BT Openreach revenue did rise, it was only by 1%. Total adjusted EBITDA fell 1%, which isn’t a catastrophe. But it did seem disappointing after the hopes arising from BT’s breakneck pace of rolling out all that fibre.
Now we’ve had a couple of months to digest this latest update, what does the future look like?
Not so glum
What we experienced over the past year or so is a common pattern. Investors saw BT had passed key milestones in two areas. There are those broadband expansion milestones. And the company achieved its cost restructuring and savings a lot sooner than I expected.
But BT’s business has always been the kind that can only be relatively slow to turn around. I reckon investors expected to see it all turn into big profit growth unrealistically quickly, and piled in.
What next?
Analysts weren’t put off by BT’s unexciting start to the current financial year, and neither am I.
Forecasts still see earnings per share growing 50% between 2025 and 2028. And they seem confident in future dividends, predicting a 10% rise in the same period — with 1.8 times cover by earnings by 2028.
I say don’t write off BT — I think it’s one investors should consider buying for the long term.
This story originally appeared on Motley Fool
