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BT Group PLC BT.A

Rating as of

Morningstar’s Analysis

Valuation
Currency in GBX
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

BT’s Revenue Continued to Slide in Fiscal Q1; Virgin’s Fiber Plans Shouldn’t Be a Game Changer

Analyst Note

| Michael Hodel, CFA |

BT’s fiscal first-quarter results were a bit weak, with revenue declining 3.4% year over year despite lapping the onset of the pandemic in 2020. Management continues to sound an optimistic tone, however, believing that revenue is poised to rebound as pricing changes take hold and demand fully recovers. The firm also faced questions related to Virgin Media O2’s announcement that it plans to overlay its entire network with fiber over the next few years. While retail competition with Virgin wouldn’t be new, the cable company has indicated that it is pursuing wholesale relationships with carriers like Vodafone and Sky. We agree with BT management that Virgin is unlikely to make a major move into wholesale, though the possibility is a risk. We don’t expect to materially change our GBX 200 fair value estimate.

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Company Profile

Business Description

BT Group is the incumbent fixed-line phone company in the U.K., providing phone, Internet access, and television services to residential and business customers. The firm acquired wireless carrier EE in 2016. It also runs a global services business that is still one of the largest international providers of managed networks and information technology services. The firm is organized into four segments: consumer services (46% of reported revenue), enterprise services (26%), global services (18%), and Openreach (11%, net of sales to other BT units). Openreach holds much of BT’s network infrastructure and sells access to BT’s retail units and other carriers.

Contact
81 Newgate Street, BT Centre
London, EC1A 7AJ, United Kingdom
T +44 2073565000
Sector Communication Services
Industry Telecom Services
Most Recent Earnings Mar 31, 2018
Fiscal Year End Mar 31, 2022
Stock Type
Employees 102,037