The Motley Fool

Why did the BT share price just crash? And should I buy now?

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.

White BT van in front of building
Image source: BT

It’s only been a couple of weeks since I was looking at BT Group (LSE: BT-A) as a possible buying opportunity. At the time, BT shares were on a slide, having lost a good portion of their early 2021 gains. And now, on Monday, the BT share price slumped by 4.6%, just after it looked like it might be stabilising.

At one point during the day, BT was down 7.8%. And it’s all due to speculation over a possible investment by Sky in Virgin Media O2. The two companies will, if the media stories are correct, form a partnership to provide full-fibre broadband.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

As well as offering direct competition to BT Openreach, the deal would also lose BT a major customer — Sky, which currently uses the service. Openreach is among BT’s biggest profit-making offerings too, so such a loss could smart.

But are the fears fully justified, or are we seeing a bit of an overreaction? Well, the new partnership would use O2’s new broadband network. But that currently reaches only around 1.2 million UK homes. BT Openreach, meanwhile, already passes 4.5 million premises.

BT, back in March, told us Ofcom regulations will allow it to ramp up its expansion to three million premises a year. And it has plans to get fibre to 25 million premises by the end of 2026. O2, meanwhile, plans to expand its network over the next seven years, bringing ultrafast broadband to around 14 million premises.

BT share price pressure

What does all this mean, and does it change my stance on the BT share price? Well, it doesn’t seem possible for Sky to simply abandon BT any time soon. And some sources are apparently saying the firm will carry on using BT as well as O2.

Would I be surprised if a major content provider didn’t like being stuck with a monopoly provider and wanted to expand its options? Not at all. The mooted development would bring competition to BT for sure. But did anyone think BT was going to go without competition forever? I certainly didn’t.

In fact, I reckon competition’s good for the sector, and good for investors, long-term. More open competition and less monopoly advantage will surely mean less regulatory interference from Ofcom. And given free rein, I reckon BT would have some strong competitive advantages.

Buying opportunity?

So, were I bullish on BT and planning to buy, I don’t think this latest development would really put me off. I think I’d actually see it as presenting me with a better buying opportunity.

And I’m bullish about BT, at least regarding the company itself. But the BT share price now? I can see it significantly ahead of today’s level a year from now (mind you, I’ve said the same about Lloyds Banking Group for every year of the last decade).

My big problem is still BT’s valuation. When I account for the company’s huge debt and pension fund deficit, I just can’t see it as good value for the risk. So I’m still staying out, even though I’ve a niggling feeling that I might regret it in a year or two.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies still trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Alan Oscroft owns shares of Lloyds Banking Group. The Motley Fool UK has recommended Lloyds Banking Group. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.