BT Group PLC (LSE:BT.A) has been highlighted as one of JP Morgan’s top value picks in its latest outlook on the European telecoms sector.
The investment bank sees significant potential for BT, citing improving growth prospects, easing capital expenditure, and expected regulatory shifts that could drive further upside. It also highlighted other top picks such as Deutsche Telekom and Orange.
The broader telecoms sector has rebounded 25% this year, the second best-performing European sector.
JP Morgan attributes this recovery to a long-awaited return to revenue growth, with 2024 earnings expected to increase by 9%.
A wave of price hikes across Europe and a decline in capital spending have emboldened telecom companies, with many issuing mid-term growth forecasts.
BT stands to benefit from potential regulatory clarity, including rulings on UK and Italian mobile mergers in December.
These decisions could pave the way for broader consolidation across European markets.
JP Morgan noted the financial challenges faced by highly indebted “disrupter” companies, which are curtailing their operations, providing incumbents like BT with a more disciplined competitive landscape.
The American bank remains optimistic about telecoms' long-term growth, projecting a 10% earnings rise for the sector in 2025.
BT's shares having climbed strongly since sinking to near three-year lows in the spring.