Why is the BT share price up 25%?

The BT share price has risen a fair bit. But can this continue or is it heading for a fall?

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Let me start this article with a question, albeit a tangential one. What links stocks like Royal Mail, Deliveroo, and boohoo? The answer is they have all dealt with labour-related challenges in the recent past, even though they are very different from one another. This reason alone may have been responsible for a fair bit of share price damage to each of them. And this is where the BT (LSE: BT.A) share price comes in.

Managing labour relations

While going over the FTSE 100 telecom and broadband company’s extensive investor bulletin released recently, its dealings with its workers’ union stood out for me. The company has managed to stall a potential strike and agreed to suspend any actions that would result in workers losing their jobs. It further says that it is in “constructive negotiations” with the union. 

To my mind, handling this situation well may be a significant win at a time when ethical investing is on the rise. It is no coincidence then, that the BT share price has managed to remain elevated in recent times. In fact, over the past three months, its share price has risen some 25%. Over the last year, it is up 69%. 

It has fallen some 8% from the one-year highs it saw late last month, but it is still sitting on some pretty big increases. In fact, since the last time I wrote about the stock in May, its share price is up 9%. 

New investments in BT

I think the best may yet come for the stock, though. It is optimistic about its future performance and will also start paying dividends again. Its mobile network and broadband are making progress. Notably, Openreach, its subsidiary focusing on the cable network for its broadband services, has received investor attention. 

Patrick Drahi, who also owns the French telecom multinational Altice, has just made an investment in BT. He has expressed faith in the potential of the network. He has also said “Altice has a long and highly successful record of effectively operating national fibre and mobile networks in a number of countries…”. This may well turn out to be a good deal for BT, then.

BT’s own top management has also been buying up shares in the company. This is often a good sign in my view, that endorses the company’s potential.

What’s next for BT? 

However, whether BT is able to become a stock that consistently sees an increase in value remains to be seen. For years before the pandemic, its share price had been falling because of consistently weakening performance. I think that for a genuine turnaround, this trend will need to be reversed. 

If it can do so, I think BT has a lot going for it. Mobile and Internet connectivity will only grow over time. Broadband, in particular, is of high priority for the government too, which can help in generating demand for the company’s network.

I bought the stock a while ago. And I intend to continue holding it.

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.

Manika Premsingh owns shares of BT GROUP PLC ORD 5P. 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.

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