5 Ways BT Group plc Could Make You Rich

BT Group plc (LON: BT.A) has enjoyed a year of sporting success, and further victories could follow.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.


BT Group (LSE: BT-A) (NYSE: BT.US) has enjoyed another storming year. Here are five ways it could make you rich.

1) By continuing its momentum

The old British Telecom was a bit of a joke in its day. The only people laughing at BT Group are those who bought its shares five years ago (sadly, I’m not one of them). The stock is up a ringing 300% since then, roughly six times the growth rate on the FTSE 100. It has been firing on all cylinders lately, defying the flat market to rise 45% in the last 12 months. If you’re looking for a momentum play, BT could be the one.

2) Winning and winning again

British Sky Broadcasting looked unbeatable on its Premier League home turf, swatting aside upstarts such as Setanta and ESPN, until BT unveiled its gameplan. Its bold attacking strategy and clinical finishing swept BSkyB away, allowing it to pick up some priceless TV rights silverware. It has since strengthened its football proposition, paying £300 million a season for exclusive live broadcast rights to the UEFA Champions League and Europa League for the next three seasons. A mighty 2.5 million people signed up to BT sport by the third quarter, contributing to 6% revenue growth in its consumer business. Millions more have signed up via a wholesale deal with Virgin Media. BT is on the attack.

3) Building on these great numbers

BT’s Q3 pre-tax profits leapt 8% to £617 million, while revenues rose 2% to £4.59 billion year-on-year. Earnings per share (EPS) rose 12%. Even its debt position improved, down £500 million to £7.64 billion over nine months. After a record quarter, a massive 18 million households now have access to its fibre network. Better still, it is enjoying double-digit revenue growth overseas. While the FTSE 100 companies have been downgrading their profits outlook, BT has had a more uplifting story to tell. EPS are forecast to grow 11% in the year to June 2015, and 9% the year after.

4) By being and bigger and faster than its competitors

BT has also been quick off the blocks when it comes to superfast fibre broadband, putting on a net total of 150,000 new customers in the third quarter, a rise of 23%. That accounts for 60% of market growth, walloping rivals Sky and TalkTalk. It is now looking to take the lead in ultra-high-definition TV technology, using its £2.5 billion investment in fibre-optic cables to send pictures in 4K, which are said to be four times sharper than current HD broadcasts. BT needs to stay sharp, however, as BSkyB will be keen to strike back. Investors will expect to see signs of positive growth, given the underperforming 2.4% yield.

5) Keeping it tight at the back

BT has its challenges as well. Doing battle with BSkyB is an expensive business, and launching BT Sport hit group earnings. There is the constant worry of its staff pension scheme, whose deficit actually widened by £400,000 in the third quarter to £5.8 billion. TalkTalk has been winning the battle for TV customers, thanks to the success of its YouView box. BT has been brave in grabbing market share, but now management needs to be equally bold in cutting costs, to maintain profits. This company could make you rich, but it still has a battle on its hands.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

> Harvey doesn't own shares in any company mentioned in this article. The Motley Fool has recommended shares in BSkyB.

More on Investing Articles

Investing Articles

2 mouthwatering FTSE growth stocks I’d buy and hold for 10 years

Growth stocks purchased today could be the gateway to many years of capital growth and returns. Here are two picks…

Read more »

Investing Articles

Can the IAG share price really be as dirt cheap as it looks?

While most shares have recovered since the Covid days, the IAG share price is staying stuck to rock bottom. Surely…

Read more »

Investing Articles

BAE Systems shares are flying! Have I missed the boat?

Sumayya Mansoor looks into whether or not BAE Systems shares are still a good buy for her portfolio after the…

Read more »

British flag, Big Ben, Houses of Parliament and British flag composition
Investing Articles

1 heavyweight FTSE 100 share I’d buy as London retakes its crown

Some Footsie firms are extremely large, but that doesn't mean they couldn't get even bigger. Here's one such FTSE 100…

Read more »

Investing Articles

I’d buy 5,127 National Grid shares to generate £250 of monthly passive income

With a dividend yield of 6.5%, Muhammad Cheema takes a look at how National Grid shares can generate a healthy…

Read more »

Investing Articles

The FTSE 100’s newest member looks like a no-brainer to me!

This Fool explains why she sees the newest member of the FTSE 100 as a great opportunity after its recent…

Read more »

Investing Articles

Empty Stocks and Shares ISA? Here’s how I’d start earning a second income from scratch

Like the thought of earning extra cash tax free? Our writer explains what he'd do to begin earning passive income…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

No savings at 25? I’d start by investing £3k in these 3 red-hot FTSE 100 shares

Harvey Jones thinks these three FTSE 100 stocks would be a great way to kickstart a portfolio of UK shares.…

Read more »