Share price sees a much needed boost.
BT reaffirms guidance as profits jump above expectations
- The telecommunications company reported a growth in earnings but a 2% drop in first quarter revenue
- The shares responded positively to the news, rising 3.6% in early morning trading
- The Share Centre continues to recommend BT as a ‘hold’ for medium risk investors
Global telecommunications group BT updated the market this morning with its first quarter trading update. Numbers came in slightly ahead of expectations, leading to a 3.6% rise in the shares this morning which should please long suffering investors who have seen the share price fall by around 45% over the last two years.
Adjusted earnings were up by 0.8% to £1.8 billion, helped by improved mobile margins and cost savings. The telecoms company said that it reiterates its guidance for the year for a 2% fall in revenue and estimated earnings to be between £7.3 and £7.4 billion.
Despite pressure on its broadband business, the CEO stated that they had made a “good start to the year and that positive progress against our strategy” has been made. Meanwhile, its mobile business proved resilient as mobile customers rose 4%.
Though there was also some much needed improvement in its customer experience metrics, the news follows the announcement that the UK’s Department for Digital Culture, Media and Sport posted its Future Telecoms Infrastructure Review, saying full-fibre broadband should be available to all UK homes by 2033. Viewed as a positive for the group, we expect that, should the company respond efficiently to industry demands and trends, the stock may become more attractive for investors. For now, there are clearly still challenges on a number of fronts so the shares are no better than a ‘hold’.
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