BT Group (LSE: BT-A) shareholders endured a rocky time in 2021. They saw the value of their holdings climb in the first half of the year, but then turn tail and collapse again by mid-October. Since then though, the BT share price has been on the rise again, and the momentum has continued into 2022.
In January, BT shares climbed a further 15%. That takes them back to pre-pandemic levels. But though we saw a gain of more than 50% in the 12 months to the end of January, the longer-term trend is less impressive. Over the past five years, BT shares are still down around 35%. So what’s behind the early 2022 uptick?
The return of BT’s dividend will surely have boosted optimism a little. Prior to the pandemic, BT had been paying big dividends while reporting steadily falling earnings. The yield reached nearly 7% for the year to March 2019, but I doubted that could be sustained for long.
It suspended payments when the pandemic hit. But it reinstated them at the halfway stage reported in November. The 2.31p per share, if doubled for the full year, would yield approximately 2.4% on the current BT share price. The final instalment is likely to be a bit bigger though, so I wouldn’t be surprised to see a total yield of around 3.5%. That’s just guesswork on my part, and I do wonder if it’s a smart move for a company carrying such huge debts.
Biggest BT share price driver?
There’s more than just the dividend behind the latest BT share price gains. It comes from the direction of Altice UK, a company owned by French telecommunications billionaire Patrick Drahi. Mr Drahi has been buying into BT, upping his stake from 12.1% to 18% as of December. That spurred takeover rumours, which gave BT shares a boost.
Under UK stock market rules, the move can’t progress to a takeover attempt before June. And Altice UK said in December that it “does not intend to make an offer for BT“. At the time, Mr Drahi said of the BT board and management that “we continue to hold them in high regard and remain fully supportive of their strategy“.
What happens now?
But you can never say never when it comes to takeover possibilities. And things can change in the future. Meanwhile, a lot of investors are expecting a strategy of creeping influence. Whatever Mr Drahi’s long-term plan, one thing is certain. When a major investor takes an increasing stake in a company, people sit up and take notice. And they typically expect something to change going forward.
It’s happened recently with Unilever, as it’s become clear that activist investor Nelson Peltz has been building up a stake. Investors there appear to be expecting some shake-ups as a result. Could the same happen at BT? I certainly think there are things that could be improved at BT. And I suspect the Drahi influence on the BT share price will continue.
