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BT (LSE: BT.A) shares fear me, however I appear to be in a minority. Currently, the FTSE 100 telecoms big has been doing very properly. The BT share value is up 33% over the previous 12 months and 70% over two years, and it’s nonetheless climbing. Ought to I cease fretting and be part of within the enjoyable?
My unease goes again to the times when BT was a sprawling, directionless conglomerate, weighed down by an unlimited legacy pension scheme and a mountain of debt. It additionally made some odd strategic calls, reminiscent of making an attempt to tackle Sky for Premier League soccer rights, with combined outcomes.
Income rising, revenues flat
As if that wasn’t sufficient, the nationwide rollout of fibre to the premises (FTTP) broadband, accomplished by subsidiary Openreach, combines enormous upfront spending and unsure long-term rewards.
Even I can see issues have improved. BT Sport is a fading reminiscence. The pension scheme ought to be absolutely funded by 2030. In full-year 2025, BT reported a 12% rise in revenue earlier than tax to £1.3bn, though income slipped 2% to £20.4bn amid fierce competitors and weaker handset gross sales.
I wouldn’t say the enterprise itself is hovering. Openreach added 1.1m web FTTP clients within the first half of full-year 2026, taking whole linked premises to 7.6m. Nonetheless, smaller alt-net rivals are snapping at its heels. Openreach misplaced 242,000 broadband strains within the second quarter alone.
It additionally faces a newly merged rival in VodafoneThree. In the meantime, BT’s largest shareholder, Indian billionaire Sunil Bharti Mittal, now has a seat on the board and is reportedly edgy in regards to the route of journey.
Chief govt Allison Kirkby has accomplished nicely since taking the helm two years in the past, constructing on the turnaround launched by predecessor Philip Jansen. That concerned reducing prices, scaling again broadband funding, pushing via £3bn of value financial savings and offloading non-core companies.
Telecoms stays a brutal market. Operators need to spend closely simply to face nonetheless, BT can nonetheless really feel like a drained model, and competitors is intensifying, significantly from a revitalised Vodafone.
Respectable worth, strong yield
But the shares proceed to carry out and don’t look particularly costly, with a price-to-earnings ratio of simply 10.1. The dividend yield has slipped to round 4.2% because the share value has risen. Future development ought to be modest although, judging by the current 2% improve within the interim payout. Oh, and web debt nonetheless tops £20bn.
Personally, I nonetheless wouldn’t purchase the shares at the moment. A lot of the current share value energy seems like a restoration from a poor run, helped by peak broadband spending. I don’t just like the tempo at which Openreach is shedding clients, whereas the struggling UK financial system is squeezing family budgets.
Dealer forecasts don’t excite me an excessive amount of both. They produce a median 12-month goal value of 202.7p, up round 5% above present ranges. Add in a ahead yield of roughly 4.3%, and the whole anticipated return involves about 9.3%, which might flip £10,000 into £10,930 if the whole lot goes as forecast.
For me, the longer-term image nonetheless feels too unsure, as BT continues to seek for a transparent id in a tricky market. I gained’t contemplate shopping for the shares. I can see much more tempting revenue and development prospects on the FTSE 100 at the moment.
