The BT (LSE: BT.A) share price has struggled in recent years. So what could happen in 2024 and beyond? Could the telecoms giant rise or continue to struggle? Let’s dial in on some details to have a look.
Tough times
As I write, BT shares are trading for 132p. Over a 12-month period, they’re actually up 10% as they were trading for 120p at this time last year. However, since volatility began to hurt markets, the BT share price has slipped 17% since April levels of 160p.
Over a two-year period, the shares are down 22%. Looking back even further, they’re down 47% over five years.
Let’s recap what’s hampered BT shares. Firstly, management has struggled to drive growth and this has resulted in less-than-stellar performance. Next, competition has been increasing, namely from Virgin Media and Vodafone, as well as others. On top of that, growth initiatives including developing its broadband infrastructure – namely its fibre optic offering – has been a long and costly exercise bearing little fruit to date.
What will the New Year bring?
A couple of factors that could help the BT share price head upwards in 2024 and beyond include the completion of its new broadband roll out. Costs could fall once infrastructure is complete. In turn, performance growth could boost the shares. However, I view this as a longer-term bullish aspect, rather than something that will happen in 2024 alone.
I can’t ignore BT’s dominant position, market share, and its loyal customer base. These are key ingredients for any business to perform well. Its variety of services, as well as its crucial position within the country’s infrastructure, should help provide some form of safety net for the business, its performance, and shares, in my opinion.
On the other side of the coin, BT’s debt levels are a huge concern for me. Debt levels of £24bn compared to £4bn of cash is a worry. It’s even more concerning when you consider that we’re currently in a high interest economy. Debt is costlier to service during times of high interest. This could definitely keep BT shares from rising.
Finally, BT doesn’t seem to have the same allure as a business for its consumers as it did in decades gone by. Competitors with quality alternatives chipping away at its market share have hurt its performance and investment viability.
Final thoughts
To be honest, I don’t see BT shares moving drastically next year. If macroeconomic volatility subsides, I reckon they’ll head upwards slightly, as will many stocks generally.
However, there are too many issues for the telecoms giant to contend with. These include competition, debt levels, and performance being stagnant due to infrastructure and growth spending, not to mention mountains of debt.
However, in the longer term I can see the shares rising. This is purely linked to BT’s core position in the UK telecoms ecosystem and growth initiatives mentioned.
At present, BT shares could be a great value play, as the shares trade on a price-to-earnings ratio of just seven. However, I won’t be buying BT shares personally. I’ll keep a close eye on developments though.
