Stocks in Focus: BT Group


This week Danielle Gibson of NW Brown Wealth Management looks at the British multinational telecommunications company, BT, following the recent release of its full year results. 

2018/19 has been a year of upheaval for the company with the departure of its CEO, Gavin Patterson, following a series of disappointing results and loss of investor confidence.

Despite showing progress towards its restructuring strategy and improved customer experience, the recent results were uninspiring with revenues down 1% year on year and a 2% fall in profits.

The announcement marks the first reporting occasion for Philip Jansen, who took over the helm from 1 February following six years as CEO of the payment processing company, Worldpay. Mr Jansen has made a flying start to shake up the business having announced last week that all employees will by given £500 in company shares every year in a bid to increase morale and encourage more involvement within the business.  In addition he has put a temporary halt on job cuts, following his predecessor’s ambition to cut 13,000 jobs, which has been taken well by Unions.

Despite this promising start, there remains a considerable amount of work to do to successfully turn around the business. The key strategic priorities include increasing “Fibre-to-the-premises” (FTTP) to 4m premises by the end of 2020/21; to launch 5G live to 16 cities in 2019 through the mobile communications business, EE, while also continuing to improve on customer service. All of this will require a significant amount of investment across the business, which is likely to continue to weigh on returns for the next few years.

Reassuringly, the dividend has so-far remained intact despite concerns of a cut as part of cost saving initiatives. With a fresh, new CEO keen to make an impact, investors will be keen to see whether the change in leadership can succeed in renewing confidence in the business.

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