BT Group Share Price Forecast December 2021 – Time to Buy BT.A?
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Shares of British multinational telecommunications holding company BT Group (LSE: BT.A) are in the green today, after closing at 178.45p as of December 10th (17:59 GMT). The shares experienced positive growth this week, after initial reports that Billionaire Mukesh Ambani’s Reliance Industries was interested in bidding for its ex-monopoly telecoms business.
BT Group – Technical Analysis
According to BT Group’s financial statement, the market cap of the company is at £ 1.768 trillion with total assets worth £5.158 trillion. Revenue for 2020 was £2139.80 billion with a profit margin of 6.88% compared to £2281.10 billion in 2019.
Moving averages such as Exponential Moving Average (10)(172.14), Simple Moving Average (10)( 171.15), Exponential Moving Average (20)(167.62), Simple Moving Average (20)(166.87) and Exponential Moving Average (30)(164.62) are indicating a sell action. On the hand, oscillators such as Average Directional Index (14)(31.65) and Awesome Oscillator(13.67) are neutral.
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Recent Developments
To many in the investing world, BT is an obvious front runner in the 5G industry. It currently operates the largest telecommunications network in the UK. According to its recent earnings report, 5G has accounted for the primary growth driver behind BT. The shares are up 40% over the last 12 months with a 5G customer base of over 5.2 million. It now provides almost 40% coverage across the UK.
Another contributing factor is the rumoured takeover talk ever since French telecoms billionaire Patrick Drahi bought a 12% stake in the company. However, it is unlikely this deal will go through as the company is a sprawling giant with a multi-billion pound pension deficit. Buyers will be put off by the prospect of untangling the enterprise and managing these pension assets. However, the talks of a potential acquisition are enough to drive the stock price up even higher. Drahi’s interest in the company indicates that the share price is undervalued.
Should You Buy BT.A Shares?
In addition to the takeover rumours, investors have many other reasons to keep on buying BT shares. The company has pushed ahead with its restructuring plans as its spending more money on its core telecoms business. It is focusing more on improving fibre connectivity around the country. The company is also restructuring its non-core businesses such as the pay-TV business which has been a drain on the company for several years. It initially aimed at capturing a large share of this market by offering consumers an all-in-one package where customers can bundle pay-TV, broadband and phone packages together.
The company is now trying to untangle this mess, as it has agreed on a £600 million deal with streaming company DAZN to co-operate on a streaming sports business. There are also talks about Discovery, the US media group which owns Eurosport is interested in a joint venture with BT Group. This initiative will help the company reduce losses and improve offers for customers.
BT was struggling before the pandemic and the launch of the company’s new growth initiatives. The company’s net profit decreased from £2.5 billion in 2016 to £2.2 billion for 2019. It has since fallen to £1.5 billion for its 2021 financial year.
From this stage, the shares are poised for a recovery, which could cause the market to focus on the business yet again. BT will also return to paying dividends this year, with analysts expecting a dividend per share of 7.5p for the next year. However, the group is still struggling with a lot of debt on its balance sheet, and a multi-billion pound pension deficit. If investors just concentrate on the company’s growth potential and current valuation and disregard the above risks, BT.A could still be valuable shares to buy.
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