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.