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BT recommended as a ‘buy’ as Q3 results comfortably beat expectations

30th January 2015 Print

As BT reports its Q3 results, Ian Forrest, investment research analyst at The Share Centre, explains what it means for investors.

“In its Q3 results reported this morning, BT comfortably beat expectations reporting a 13% rise in pre-tax profit. The group’s key consumer division achieved a 15% rise in broadband and television sales, which included its best ever quarter for growth in its fibre broadband products. The news that the company is also planning to roll out ultrafast broadband with speeds up to 500Mbps to most of the UK within a decade, also shows it is responding to demand from its customers and technological changes.

“The company announced it is making good progress with the due diligence process for the potential £12.5bn acquisition of mobile network EE, but that news was overshadowed by reports of an increase in the group’s pension deficit to £7bn which may hamper its ability to bid for football television rights.

“We continue to recommend BT as a 'buy' for medium-risk investors. The company continues to see strong demand for its products, the valuation is attractive and the healthy cash flow should lead to a steady increase in dividends over the next few years.”