The BT share price is starting to rise. Here’s what I’m doing now

first_imgThe BT share price is starting to rise. Here’s what I’m doing now Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. It has been a tough year for BT Group (LSE:BT-A) investors as the share price has dropped almost 40% since January. The stock has hardly been a stellar performer over the past few years, but is it now selling at a bargain price?As a reminder, BT Group is a telecoms infrastructure business. Operating under numerous retail brands – BT, EE, Plusnet, and Openreach – the firm supplies approximately 35% of the UK population with broadband.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…On the enterprise-facing side of the company, BT owns and manages the UK’s core fixed network. Over 650 communications providers piggyback off the system to provide their customers with strong mobile signal for 2G, 3G, 4G, and soon 5G.Why the BT share price has droppedWith such a diverse and far-reaching portfolio of services, it may seem odd that the BT share price has performed so poorly. The biggest problem is its level of debt. Building and maintain its communications network is a costly process.The firm spent billions securing 3G licenses across Europe, repeated the process for 4G, and will likely repeat the story with 5G. It doesn’t help that the government restrictions on Huawei’s involvement with building the UK’s 5G network have added more pressure. As it stands, this pressure amounts to an expected £500m additional cost for BT over the next five years.The company’s rapid growth during its early days created a vast need for cash flow that operations were simply not producing. So BT turned to debt financing and then seemingly never stopped. As a result, it now has over £27bn in long term obligations, including loans, leases, pensions, and tax deferrals.Today, the total debt is nearly double the firm’s £10bn market capitalisation.Furthermore, with the impact from Covid-19, the board of directors announced the suspension of all dividend payments until 2022. Subsequently, the share price fell to a 10-year low.Light at the end of the tunnel?The stock price has recently begun to rally following the release of the half-year report. Management raised guidance on the expected earnings before interest, taxes, depreciation & amortisation (EBITDA) from £7.2bn-£7.5bn to £7.3bn-£7.5bn. I’ve estimated this to translate into a net income of £1.6bn-£1.9bn.Operationally, the business appears to be doing rather well. A new partnership with Belfast Harbour to deploy 5G was secured, improvements made to infrastructure have reduced annual costs by £352m, and the 5G network is now live across 112 cities around the UK.Yet despite all this good news, revenues and profits continued to fall by 8% and 20%, respectively. However, a very positive sign was the repayment of £720m of debt. This doesn’t solve the solvency problem by a long shot, but it’s nice to see debt levels finally begin to decline.The bottom lineSuch a sharp rise in share price on what appears to be mediocre news tells me the stock is vastly undervalued. However, given the state of the balance sheet, I’d much rather invest my money into a company which isn’t riddled with liabilities. Image source: Getty Images. “This Stock Could Be Like Buying Amazon in 1997” I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. See all posts by Zaven Boyrazian Our 6 ‘Best Buys Now’ Sharescenter_img Zaven Boyrazian does not own shares in BT Group. The Motley Fool UK has no position in any of the shares mentioned. 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. Simply click below to discover how you can take advantage of this. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Enter Your Email Address Zaven Boyrazian | Thursday, 12th November, 2020 | More on: BT-A last_img read more