The BT share price is on the move. Should I buy the stock now?

| March 10, 2022

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5G technology

  • BT is one of the leading communications companies
  • BT announced two strategic partnerships with Sky and Eurosport UK
  • The company has huge debt holdings

What is BT?

BT (LSE:BT.A) is the world’s oldest and leading communications company and it’s share price has recently been on the move. Headquartered in the UK, the firm operates through two divisions:

  • Consumer – This division handles mobile, broadband, home phone, and TV services offered by the company
  • Enterprise – This division caters to businesses and public sector organizers along with communication providers. BT sells communication services, IT services, and network products and services

With the company’s network spread across 180 countries, BT serves over 14 million households in the UK alone. Unsurprisingly, it’s been labelled as one of the leading businesses in the UK!

Why BT share price could go up?

The BT share price is currently at 168p. The £17bn company market capitalisation has experienced multiple dips and spikes in the past two years. After hitting the peak of 204p in June 2021, the BT share price started declining. Interestingly, the stock changed its course after touching 136.7p. And to date, it has maintained its upward trend.

BT recently announced two strategic partnerships with Sky, one of the leading players in the UK broadband industry, and Eurosport UK, a European sports network and a subsidiary of Discovery. The company is right on track in the fast-evolving content and TV business. In my opinion, the announced plans of the company will drive the BT share price further up.

With the company’s 5G covering almost 40% of the UK’s population, these joint ventures will further widen the choices for existing customers. And there is no denying the fact that the new services portfolio of BT is attractive enough to lure more customers on board.

Isn’t it enough to drive the BT share price up? I believe so.

Challenges ahead

Despite reporting a huge growth in FTTP connections, the company reported a decline of 3% in net profit in the third quarter report for 2021. What drove the net profit down were the high finance expenses. Because of a huge debt amount, as reported in the balance sheet, the future profitability of the company is also at risk of further decline. Without a doubt, a declining profit raises my concerns as an investor.

Also, the telecom giants like AT&T, Verizon, and Vodafone, offer a tough battle for market share. In order to beat them and maintain its hold over the broadband market, BT needs expansion in its service offerings like its recent partnerships with Sky and Discovery.

Are BT shares worth investing?

Despite being the leading broadband provider in the UK, the rapid technological changes in the telecom sector remain a challenge for BT. No doubt, the 5G coverage of the company is going strong. But the high leverage position as shown in the balance sheet is a matter of concern. In fact, I believe the huge debt holdings could take a toll on the BT share price soon.

That’s why personally, I’m keeping this stock on my watchlist for now.

Learn more about BT shares

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Saima Naveed does not own shares in any of the companies mentioned. The Money Cog has no position in any of the companies mentioned at the time of writing. Views expressed on the companies and assets mentioned in this article are those of the writer and therefore may differ from the opinions of analysts in The Money Cog Premium services.