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Stock Watch

Will the BT share price keep rising after full-year results?

BT share price: BT Openreach logo on a van

The BT share price has been on an upward trajectory over the last few months, recovering from below 100p in November 2020 to reach a high for the year at over 170p this month.

After a difficult year, things seem to be looking up. What will the full-year results mean for the BT share price?

BT share price rising after tough year

Over the last year, BT Group has had to contend with the competing demands of a tough market in broadband and mobile hitting margins in its consumer division.

The company’s Enterprise and the Global divisions are having to cope with rapidly changing business environments, as well as the decrease of use in legacy products such as fixed-line phones.

BT are expected to reveal falling profits at Thursday’s full-year announcement, but with the BT share price rising 40% over the past 12 months, the telecoms giant is expected to restore the dividend of 7.7p a share in the next fiscal year. BT’s management have also upped their profit guidance for the full-year to £7.3bn to £7.5bn...

Openreach outperforms as demand rises

On the plus side, the BT share price has been buoyed by the company’s Openreach division, which has the chance to benefit from the rollout of the high-speed broadband the UK needs if it's kept under the BT umbrella.

Last May there was some chatter that BT was looking at selling off a multibillion-pound stake in Openreach, in order to help fund its investment in accelerating the build of its FTTP network, with a target of 20m homes by the mid to late 2020s, and a target of over 2m in 2020-2021.

BT also said it had doubled the number of FTTP orders, as well as expanding its 5G network across 112 towns and cities across the UK.

BT Sport set to be offloaded

BT has also been competing with Sky for eyeballs with its huge investment in BT Sport. The company has previously invested heavily to secure its piece of the £4.5bn Premier League broadcast rights, as well as securing deals for boxing, UFC, WWE, rugby union and more.

All of this costs a great deal of money. The division has cost the company an estimated £800m per year, a sum that it seems BT would now like to use elsewhere, confirming that early discussions to offload BT Sport have taken place. The outlet has become a luxury that BT can no longer afford if it's to plough investment into its network infrastructure, which has become a high priority as demand for better broadband has increased during lockdown.

Given BT’s other obligations in terms of 5G and broadband upgrades, it simply don’t have the resources to compete with the likes of Sky, Disney and other new entrants to the market, like Amazon. Any additional money that can be freed up by the disposal of BT Sport can be better spent in supporting its various networks, where it's making significant progress.

What will this week’s results mean for the BT share price? Find out as the company releases its full-year numbers at 7am on Thursday.


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