BT shares looking to scale heights not seen since May 2018
The BT share price is up over 74% in the last 12 months, firmly breaking the 200p barrier. Within this article, we assess the likely impact of its recent deal with OneWeb to redefine rural broadband connectivity across the UK.
- BT shares up almost 50% in the year to date
- Barclays’ analysts feel BT share price can hit 300p
- BT embarks on satellite journey to transform rural broadband
- Compensation case ongoing for 2 million BT landline users
- Ready to trade the BT share price? Open an account today
Could OneWeb’s satellite technology hold the key to BT’s rural broadband roll-out?
BT Group PLC has agreed on a new deal with taxpayer-funded satellite technology operator OneWeb in a bid to add an extra dimension to its rural broadband project. In May, BT confirmed it would be ramping up its full-fibre broadband infrastructure, bringing high-speed connectivity to over 25 million households by December 2026.
This acceleration includes bringing full-fibre connectivity to more than 1.5 million rural properties. Its new partnership with OneWeb will see BT explore satellite technology as a means of revolutionising connectivity in the UK’s most remote areas, while assessing the opportunities overseas for BT customers.
OneWeb specialises in low-orbit satellite communications that are fast and cost-effective. BT CEO Philip Jansen described this arrangement as being beneficial in ensuring ‘connectivity can reach every last corner of the country’.
Why do Barclays analysts believe BT shares are still undervalued?
Even before the announcement of BT’s new partnership with OneWeb, analysts at Barclays believed in the medium-term potential for the BT share price. Its analysts have set a best-case valuation of 300p for BT shares in the coming months.
The BT share price has continued to strongly outperform the FTSE 100 despite the easing of the Covid-19 pandemic, up almost 50% in the year to date, compared with 11% for the FTSE 100 index. Barclays’ analysts believe this has been powered by the ‘improved visibility of returns at [BT] Openreach’.
They also pointed to the recent investment from Altice owner Patrick Drahi, with the French firm securing a 12% stake in BT.
Will the Collective Action on Landlines compensation case curb the BT share price?
The one cloud overshadowing the surge in BT shares is BT’s ongoing case against its two million landline-only customers. A campaign was launched demanding compensation for its older customers, as well as those on lower incomes. This was due to the ‘poor value’ offered for its services pre-2018 when BT cut line rental charges by £7 monthly for landline customers.
UK regulator Ofcom was particularly critical of BT’s landline services, with the Competition Appeal Tribunal set to make a judgement soon. If the case proves successful, customers could receive up to £500 per household. However, BT insists it will continue to ‘defend itself vigorously’ against such action.
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