The BT (LSE: BT-A) share price has been falling recently. Since February the stock has been on a good run. In fact, the shares touched 206p in June. But since then BT has been on a decline and is now trading at 169p.
I reckon this blip is a buying opportunity and I’d snap up some BT shares. Here’s why.
Things are slowly but surely changing for the firm. I’ve mentioned before the 12% stake held by Altice, which I think will help push forward the company’s transformation. But more recently, the FTSE 100 firm announced the appointment of a new board member.
Adam Crozier will join BT as an independent non-executive director and chairman. This is a key and influential role. So for this position, the company needs someone with a lot of experience.
On paper, Crozier seems like a good candidate. I’ve read his biography and he has had some high-profile jobs in the past. Crozier is currently the Chairman of Whitbread, ASOS, and Kantar Group, as well as a non-executive director of Sony Corporation.
He has a strong track record in turning around companies, which will come in handy when he starts at BT later this year. Crozier will also step down from his roles at ASOS and Sony when he takes the BT position.
Following the investment from Altice, now seems like a good time to shake up the board with a new senior hire. And that’s exactly what has happened. I personally think this is a good thing so I’ll be watching closely to see what changes Crozier makes under his tenure.
Earlier this week, the BT share price was hit as news came out that a competitor to the Openreach network, CityFibre, is due to secure a £500m funding boost from a consortium of investors. This includes Abu Dhabi’s sovereign wealth fund, which manages significant assets. There’s also further news that these investors may be looking to buy a minority stake in CityFibre. The deal is expected to be announced over the coming weeks.
The point of this investment is to help the competitor ramp up its ultra-fast broadband rollout. This is something BT is doing with its Openreach division. I’m personally not worried about this and I think the slump in the shares was something an overreaction.
Of course, BT is always going to face competition. But let’s not forget that it has the backing of Altice, which has a strong track record in the telecoms sector. I don’t think CityFibre’s deal will delay the FTSE 100 firm in meeting its own full-fibre broadband goals.
Yet the stocks does comes with risks. The key one is that its financial position isn’t the strongest. It has a large debt pile and chunky pension deficit to pay. These liabilities aren’t going to disappear overnight and could put pressure on the BT share price.
Now that its competitor looks as if it has secured funding, the firm will need to increase its efforts to deliver its targets. If it doesn’t, then the shares are likely to take a hit.
Should I buy?
As I said, things are slowly but surely changing. In my opinion it’s taking the right steps. So as a long-term investor, I’d use this dip as a buying opportunity.
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Nadia Yaqub has no position in any of the shares mentioned. The Motley Fool UK has recommended ASOS. 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.