BT shares ‘on track’ for growth despite revenue miss

The UK telecommunications giant remains optimistic about its 2022 and 2023 forecast, despite weaker-than-expected Q1 2021 results.

  • BT Group (LON: BT.A) shares fell over 8.5% on Thursday morning (29 July 2021)
  • The UK’s second largest telco posted a 3% revenue drop in its first quarter trading update a day earlier, missing analyst targets
  • It remains optimistic about hitting its FY2022 and FY2023 targets
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BT stock price takes a huge hit

BT Group shares plunged by as much as 8.8%, a day after it reported its first quarter results for 2021.

The telco posted a 3% year-on-year drop in revenue to £5.07 billion, primarily due to challenging market conditions resulting from Covid-19, the impact of prior year divestments, a negative £39 million foreign exchange movements, and ongoing legacy product declines.

The Q1 revenue came in slightly below UBS analysts’ predictions of £5.15 billion.

It also recorded a 4% drop in profit before tax to £536m, despite a higher and better-than-expected adjusted EBITDA of £1.87 billion (up 3% year-on-year).

The FTSE 100 stock is up 23.7% year to date.

BT ‘on track’ for growth in 2022 and 2023

Nevertheless, the company remains optimistic that its financials are ‘on track to deliver’ its FY2022 and FY2023 growth outlook.

Philip Jansen, Chief Executive of BT, said that the group’s operational performance ‘remained strong’, reflecting ‘improved trading’ across most of its business.

‘Our results were overall in line with our expectations during the quarter, with good performance in the UK offsetting challenging conditions in Global's markets,’ he said in the trading update.

‘With trading conditions expected to see some improvement through the year, we have confirmed our outlook and remain confident that BT is on a path to growth,’ he noted.

Jansen added that BT will continue to invest in new strategic and network growth areas, including its Openreach FTTP network, which now covers more than 5m premises.

The company also plans to increase its rural FTTP target to 6.2m premises as part of an ongoing programme to reach 25m premises by the end of 2026.

Jefferies analysts concurred with the company’s outlook and roadmap. They predicted that revenue will inch down 0.1% and EBITDA will rise 1.6% in 2022, with revenues to move up 1.5% and EBITDA to jump up 3.9% in 2023.

‘Openreach focusing FTTP deployment on areas of existing cable coverage creates an opportunity for BT Consumer to regain broadband market share,’ the analysts said.

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