Why I’m excited about where the BT share price could go!

After an impressive start to the year for the BT share price, Charlie Keough looks at why he thinks this fine form can continue.

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It’s safe to say investors who bought FTSE 100 telecommunications giant BT (LSE: BT.A) five years ago would have been left feeling despondent today, with the stock down over 40% since. 

However, BT has seen a steady increase in its share price since the turn of the year, up 11% in that period. What’s more, in the past 12 months it has risen 45%.

So, while the stock has struggled in the past, I’m optimistic about what the rest of the year and beyond could have in store for BT. Here’s why.

BT debt concerns

Although I’m excited about where the BT share price could go in 2022 and beyond, let’s start by getting my concerns out of the way. My main issue is surrounding the firm’s debt, which is currently sat at £18.2bn – a rather large figure. And this is worsened by rising inflation and interest rates. As rates have begun to creep up post-pandemic, this will make the debt BT has even more difficult to pay off. This is a potential stumbling block for progress. 

BT share price optimism

However, there are multiple reasons why I remain bullish on BT.

Firstly, last month it was announced that the firm was in the final stages of selling its Premier League rights to streaming service DAZN. The deal is rumoured to be in the region of $800m. And while there have been reports of the deal stalling, this sum would provide BT with a cash injection. As such, it could leverage the firm’s ability to pay off some of the substantial debt mentioned above.

What also provides me with optimism, and as highlighted by my fellow Fool Rupert Hargreaves, is that the company’s projections and analysts’ expectations anticipate BT to grow in 2023 as customers slowly return to the business. This will be the first time since 2016. While these expectations may not be met, if they were I would expect to see a rise in the BT share price as the market reassesses its potential.  

Further, speculation continues over a potential takeover by billionaire Patrick Drahi. After increasing his stake in the firm from 12.1% to 18% late last year, some believe he could be setting the foundations to mount a bid. While we will have to wait until summer to see if this comes to fruition due to UK takeover regulations, a potential takeover will most certainly boost the BT share price.

Why I’d buy

I’d never buy a stock just because of takeover talk. But while some of the above may be speculative, I think it highlights the potential the BT share price has to rise. The firm will benefit from any cash injection received from the sale of its Premier League rights. And this income could attribute to reducing its debt. Potential growth for the first time in seven years also excites me. With BT currently trading for 192p, I would be willing to add the stock to my portfolio today.

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.

Charlie Keough has no position in any of the shares mentioned. 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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