BT Group (LSE: BT.A) shares have had a bumpy millennium. Like many in the tech and telecoms sector, BT ended the 20th century on a spectacular high. Incredibly, the share price brushed 1,500p during the dotcom boom before crashing back to earth.
The FTSE 100 stock has enjoyed the odd rally since, but trading at 208p today (1 June) it’s still miles below its peak. It’s a very different beast today, but I still think investors are getting it wrong. Most will remember its subsequent struggles rather than the glory days. But again, BT has moved on.
Why did the shares struggle for so long?
BT has been fighting battles on multiple fronts. Competition intensified as smaller, more agile rivals chipped away at market share. Its costly move into sports broadcasting stretched finances while the group also wrestled with a huge pension deficit and stubborn net debt.
It also had to fund an expensive nationwide full-fibre rollout through Openreach, pouring billions into infrastructure just as inflation and higher interest rates pushed up costs. Sentiment has improved dramatically since chief executive Allison Kirkby arrived in February 2024, when BT shares traded close to 100p. They’ve roughly doubled because investors finally see signs that years of heavy spending may start paying off.
Kirkby has focused aggressively on costs, simplification and cash generation. BT now expects to cut more than £3bn of annual costs by the end of the decade, by using artificial intelligence to slash headcount.
Much of its stonking £15bn Openreach investment is done. BT expects to reach 25m premises with full fibre by the end of 2026, giving it mighty infrastructure scale. Adjusted EBITDA shows a business rebuilding profitability. Slowly, but also steadily:
- 2026 £8.23bn
- 2025 £8.21bn
- 2024 £8.10bn
- 2023 £7.90bn
- 2022 £7.42bn
Group profits were a lot bumpier than that, which BT has pinned on depreciation charges, the timing of fibre investments and wider economic pressures.
Can it complete its turnaround?
2026 full-year results on 21 May showed revenue dipping 4% to £19.6bn, slightly worse than expected. Openreach is growing but it’s shedding customers too – losing 825,000 over last year, and 2.4m over four years. It’s a competitive market, and smaller alt-net rivals are hovering.
Income growth looks modest but consistent, judging by the last five years total dividend per share figures:
- 2026 8.23p
- 2025 8.16p
- 2024 8.00p
- 2023 7.70p
- 2022 7.70p
Today, the trading yield is around 4%. The shares don’t look expensive, with a trailing price-to-earnings ratio of around 11.4.
I think many investors still judge BT through the lens of its bumpy past rather than the company it’s aiming to be. Kirkby wants a leaner, more capital-light business. If BT can monetise its fibre network more effectively while controlling costs, then profits and cash flow could improve sharply. The group is targeting free cash flow of roughly £3bn by the end of the decade.
Some things haven’t changed. Net debt remains stubbornly high at roughly £20bn. I’d like to see clearer evidence that management can bring that down before fully buying into the turnaround story. Still, I think BT has become far more interesting, and I’ll be watching its progress closely from here.
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Harvey Jones does not hold any positions in the companies mentioned.
