BT Group (LON:BT) offered up another disappointing quarter to end last year, but its shares are soaring Thursday after new CEO Allison Kirby (NYSE:KEX) KEX promised to shake up the British telecoms giant.
At 05:10 ET (09:10 GMT), BT Group stock rose 11% to 125.5p, but still remains 15% lower over the course of the last year.
The group reported a drop of 0.2% in group revenues in the fourth quarter and a fall of 3.4% in Ebitda.
“Misses in both Openreach/Business offset a beat in Consumer with the EBITDA miss driven by -£45m in one-off impacts,” said analysts at UBS, in a note. “Outside of the one-offs, declines in Business have been weighing on the Group and there have been headwinds from wage inflation.”
However, investors have been buoyed by Kirkby’s plans to make the telecom giant a “Britain first” business as she pledged to sell off some parts of the global company and lift the dividend for shareholders.
“BT needs to be great for the U.K.”, said Kirkby, who took on the role in February and immediately pleased shareholders by increasing the dividend to 8p, a 4% rise that takes the total payout to £750 million.
The dividend rise came after the company said that it was now past its peak in capital expenditure in its fibre build and it sees capex trending to below £4.8 billion per annum.
The big surprise is that FCF [free cash flow] guidance is much stronger than consensus expectations (both near-term in FY25: 16% ahead and mid-term in FY27 ~50% ahead),” said analysts at Morgan Stanley (NYSE:MS), in a note.
However, UBS remains wary, keeping a 'sell' rating.
“We reiterate our view that BT needs to step up its fibre rollout/capex to preserve value at Openreach,” the Swiss bank added. “Shares could move higher on the FCF guidance but we remain wary of rising broadband infrastructure competition for Openreach.”