In today's early trading, BT shares have seen a sharp drop as investors express growing concerns about the FTSE 100 telecoms group's future prospects.
Despite recently reporting an encouraging earnings update, BT is now facing investor anxiety due to broader market unrest.
This morning's transactions saw shares in the telecommunications heavyweight fall by five per cent, a more significant decline than the one per cent drop observed in the larger FTSE 100 index.
READ MORE: {}
This year, until recently, BT has been among the top performers on the FTSE 100. The company's stock soared by 15 per cent in one day back in May following the announcement of its 2023 results, as reported by .
In that report, BT highlighted that it had reached the peak of capital expenditure for its fibre broadband infrastructure project and successfully realised its £3bn efficiency and service improvement target "a year ahead of schedule."
Additionally, the company set a new goal to trim another £3bn in costs by 2029.
On the back of these successes, BT projected it could double its free cash flow within the next five years and announced plans to increase its fiscal 2024 dividend by 3.9 per cent to 8 pence per share.
Yet, the mood around BT changed at the end of July when its first-quarter financial figures were disclosed, ultimately halting the firm's positive momentum.
Most Read
The release showed a two per cent reduction in underlying revenue for the first quarter, totalling £5.1bn, with the Business division's phasing out of legacy contracts and lower sales in some sectors being particularly impactful.
Profit before tax also took a hit, decreasing by three per cent to £520m. This was attributed mainly to the dip in revenue, although partially mitigated by a decrease in operating costs.
The outlook for BT shares has been uncertain in recent years, with the company working hard to reassure investors it is on the right path.
The company's May figures appeared to show positive progress, but recent share price drops suggest investors are still not completely on board.
Last week saw BT's share price fall by almost 7%, wiping out the majority of its gains for the year so far.
Analysts at Berenberg observed in June that, while the company's full-year results were positive, BT's revenue and earnings before interest, tax, deprecation and amortisation (EBITDA) both "declined year-on-year and missed consensus."
Berenberg also pointed out that normalised free cash flow only beat expectations "due to forward sales of copper," which essentially means bringing forward future sales.
While the analysts acknowledged that the company's future guidance offered some hope for investors, they cautioned that much could change in the next few years, noting that BT's plans to boost free cash flow and further reduce costs by 2029 may appear positive on paper, but a lot could happen between now and then.