BT Earnings: Will Cut 30% of Workforce in 6-8 Years; Fair Value Down 13% After Adjusting Forecasts

Shares of narrow-moat BT Group were down 5% after the group reported full-year results, as the company ended fiscal 2023 in the lower end of its free cash flow guidance of GBP 1.3 billion-GBP 1.5 billion. This was explained by higher capital expenditure in Openreach to accelerate fiber-to-the-home deployment—a decision we support, given the healthy trends in adoption Openreach’s fiber network is seeing, which is resulting in mid-single-digit divisional revenue growth and high-single-digit growth in EBITDA. Group revenue declined by 1% organically year over year, while EBITDA grew by 5% due to the consumer division and growth in Openreach. Although we are trimming our fair value estimate to GBX 200 from GBX 230 to account for lower free cash flow in the medium term, we believe BT’s long-term equity story has ingredients to like.