Goldman Sachs (NYSE:GS) analysts have reiterated the bank's ‘buy’ rating for BT Group PLC (LSE:BT.A), following the company’s Openreach analyst day.
Openreach is BT’s fixed broadband digital infrastructure wholesale business, representing almost half of the group’s underlying earnings (EBITDA).
The presentation boosted analysts’ confidence in the telecommunications company, after management said annual fibre build costs had peaked and per-unit build costs would remain at historic lows.
BT stated that Openreach capital expenditure had peaked last year, and that material fibre operating expenses savings targets have been brought forward by two years to fiscal 2028.
The telecoms company reassured the market about ongoing customer volumes, particularly the sustainability of key customer Sky.
Analysts are confident that BT can remain within its guided capex envelope in the coming years, while delivering higher EBITDA growth through ramping up fibre upselling.
They anticipate an upside in its share price, based on accelerated growth and returns predictions, as well as free cash flow consensus.
Openreach’s cost savings pull forward would represent an approximately 7% or more increase, compared to existing free cash flow consensus, from fiscal 2028, analysts said.
Management stated that fibre build costs will remain at about £300 per home for at least the next two years, due to lower build costs stemming from technical efficiencies and new long-term supply contracts.
Better long-term supply contracts have resulted from a material fall in alternative network, or altnet, builds driving low prices and more capacity at third-party construction companies and other BT suppliers, analysts said.
Goldman predicts that BT’s share price could more than double in the coming year to as much as 290 pence per share, up from a price of about 136.65p at present, representing an upside of about 112.2%.