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£10,000 invested in BT shares 5 years ago has turned into…

BT shares have underperformed the FTSE 100 over the past five years. James Beard looks at the reasons why and asks could this soon change?

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Exterior of BT Group head office - One Braham, London

Image source: BT Group plc

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Since April 2021, shares in BT Group (LSE:BT.A) have risen 38% compared to a gain of 55% for the FTSE 100. It means a £10,000 investment five years ago would now be worth £13,800. A Footsie tracker fund would have delivered £1,700 more.

But could things change on 21 May, when the telecoms group’s due to report its results for the year ended 31 March (FY26)? Let’s take a closer look.

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Before you decide, please take a moment to review this report first. Despite ongoing uncertainties from US tariffs to global conflicts, Mark Rogers and his team believe many UK shares still trade at substantial discounts, offering savvy investors plenty of potential opportunities to learn about.

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What’s going on?

BT strikes me as a business that’s going nowhere. A review of its past and a look at its expected performance suggests that it’s in a bit of a rut.

For example, FY25 revenue fell 2.2% to £20.4bn compared to the previous year. Looking ahead, analysts are forecasting a drop and then little change — £19.7bn (FY26), £19.3bn (FY27), and £19.4bn (FY28).

It’s a similar story when it comes to EBITDA (earnings before interest, tax, depreciation, and amortisation), the group’s preferred measure of profitability. By FY28, it’s expected to be only £108m higher than it was in FY25. Adjusted earnings per share is forecast to be a meagre 2.1% more.

In some respects, this isn’t surprising. Up until its privatisation in 1984, BT was a state-owned monopoly responsible for the UK’s telephone network. Today, it has thousands more shareholders but it still owns all the wires, exchanges, and trunk lines that others have to pay to use.

Its stable earnings are typical of a utility company enjoying a natural monopoly over the infrastructure that it built. However, investors expect listed businesses to grow faster than BT’s done in recent years.

This lack of momentum probably explains why analysts’ consensus is that the group’s shares are currently (6 April) fairly valued.

A mountain of debt

Another issue is the group’s borrowings. At 30 September 2025, its net debt was £20.9bn, which is only £100m below its current market-cap. Again, this isn’t entirely unexpected. Telecoms infrastructure is expensive.

For many years, BT’s Openreach division – which contributes just under half of the group’s earnings — has been investing heavily in rolling out the UK’s full-fibre network. Currently available to around 25m homes, it expects to have reached 30m by the end of the decade.

But with the pace of this investment slowing, some analysts are expecting the group to have reached ‘peak CAPEX’ in FY26. If the group confirms this when it updates investors in May, this could give its share price a bit of a boost.

That’s because an easing of capital expenditure should provide more cash to pay down some of its borrowings. Indeed, analysts are expecting free cash flow of £2.4bn in FY28, compared to £1.5bn reported in FY26. Importantly, they’re forecasting a £1.9bn reduction in net debt. Interest costs should also fall.

My verdict

To me, BT feels like a company that should be doing much better. Prior to Vodafone’s merger of its UK operations with Three, BT had the country’s largest mobile network, both in terms of coverage and customer numbers. And it’s part-way through a huge £3bn cost-cutting programme intended to improve its bottom line. Its dividend’s pretty good too. The stock’s currently yielding an above-average 3.8%.

However, its lack of momentum makes me believe there are better opportunities to consider elsewhere.

James Beard has positions in Vodafone Group Public. The Motley Fool UK has recommended Vodafone Group Public. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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