Citigroup analysts aren’t wildly impressed with BT Group PLC (LSE:BT.A) with the American bank retaining a ‘hold’ rating and a 185p target.
BT’s first quarter results last week saw the company reinstall its final dividend as it reported lower revenue and higher-than-expected underlying profits for the past year. The telecoms group reported a 2% fall in revenue to £20.9bn but a 2% increase in underlying profit (EBITDA) to £7.6bn as management continued to take an axe to costs.
Chief executive Philip Jansen hailed infrastructure arm Openreach's roll-out continuing "like fury", with 7.2mln premises connected to high-speed broadband and the 5G network now covering more than 50% of the UK population.
In a note, Citi analysts said: “Most of the FY23 targets had already been communicated in the past, therefore consistent with consensus except a slightly light CF target. On top, BT has announced the details to set up a content JV with Discovery, which could provide scale and visibility of future TV offering with a small EBITDA impact from FY24.
“Overall, we see better trends in Consumer and Openreach but pressures on Enterprise/GS are likely to cap upside to consensus revenues. Concerns around wholesale loss to cable and fibre Altnets remain valid.”
According to Citi, BT’s next catalysts include a union negotiation decision and any update on the Liberty Global (NASDAQ:LBTYA)/Telefonica fibre joint venture.