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Will the 125p BT share price ever return to £3?

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The BT (LSE: BT.A) share price has been one of the biggest losers of the coronavirus pandemic. The stock has collapsed in value this year as investors have sold out of the telecommunications giant. 

However, despite the stock’s recent performance, fundamentally, the business remains strong. As such, I’ve been taking a closer look at the company recently, with the view to adding some shares to my portfolio. 

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BT share price opportunity

BT is by no means the perfect operation. The firm is plagued by a range of problems, including high costs, high levels of debt and a massive pension deficit. At the same time, the size of the company means it’s difficult for the enterprise to adapt quickly to changing market conditions. This has haunted the business in recent years.

As peers such as Virgin Media and Sky have quickly adapted to the rapidly changing media marketplace, BT has struggled. The company has lost customers as a result. This has impacted its ability to compete with younger upstarts. 

Still, despite its problems, BT remains the largest telecommunications provider in the country. I reckon this gives the group a tremendous competitive advantage. This competitive advantage may help the business recover from the pandemic faster than other operations. 

Pandemic changes

The coronavirus pandemic has dramatically accelerated the adoption of technology throughout the UK. This has put pressure on BT to improve the quality of its services. It has also increased the company’s market position as consumers have required a provider they can trust in these uncertain times. 

If the company can capitalise on this opportunity in the years ahead, I think the BT share price could produce large total returns for investors. And that’s the primary reason why I’m eyeing up the business right now. 

The next 12 months will be critical. The group has been able to escape the worst of the pandemic, but it needs to act quickly to capitalise on this advantage.

All indications suggest management is trying to capitalise on the opportunity. BT’s fibre rollout also reached record levels in the quarter to September 30, with a run rate of 40,000 premises per week. Overall, capital expenditure in the period rose 5% to £1.9bn to support fixed and mobile network investment.

Attractive acquisition 

Based on this growth, management is forecasting that the group will return to growth in the next few years. If the business can hit this target, I think the stock could be an attractive acquisition at current levels. A return to growth could dramatically improve investor sentiment towards the BT share price, in my opinion, driving the stock significantly higher from its current depressed level. 

That being said, BT has disappointed its investors many times in the past. So, I’m not ready to go all-in just yet. Nonetheless, I am keeping a space for this stock in my portfolio, ready to pounce if the business hits management’s growth target. 

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Rupert Hargreaves 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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