Here’s why the BT share price pumped after earnings

The BT share price continued its strong surge, reaching its highest level since 2017 after the company published better-than-expected results. It jumped to a high of 205p, up by 165% from its lowest point in 2020. It has jumped in the last six consecutive months, making it one of the best-performing FTSE 100 stock.

BT Group strong financial results

BT Group, one of the biggest telecom companies in the UK, published better-than-expected financial results on Thursday. Its trading statement noted that the company’s Openreach business lost fewer customers than analysts were expecting. 

It lost 169,000 customers in the second quarter, much lower than the 356,700 that expected. This is notable as the company has been spending billions of pounds expanding its fixed network, especially in the rural areas, which has helped it beat many of the smaller players. 

The results released today, July 24, showed that its revenue dropped by 3% to £4.8 billion. As in the other quarters, this decline was primarily due to its business segment, whose revenue fell by 6% to £1.8 billion.

Its consumer revenue dropped by 3% to £2.3 billion, while its Openreach revenue grew by 1% to £1.56 billion. The same trend happened in its adjusted EBITDA metrics as its business metric plunged by 9% to £344 million. Its consumer EBITDA dropped by 3% to over £636 million. In a statement, Alison Kirby, the CEO said:

“BT is investing more than anyone else in the nation’s networks, we’re connecting customers faster, and we’re on track to deliver our targets for this year, next year, and the end of the decade – creating a better BT, for all of us.”

To be clear: BT Group’s business is still not growing as it used to in the past. However, analysts believe that Kirby’s turnaround effort will make it a more profitable company in the future. 

Her strategy involves cutting costs and exiting its international markets and turning its focus to the UK. Her cost-cutting measures involve shedding over 40,000 workers, which will save the company about £3 billion a year. 

Most importantly, the ambitious Openreach rollout that has cost it billions is now starting to slow. The hope is that it will ultimately it about £3 billion in net free cash flow by 2030.

Still, the company is now contending with more competition, especially after the creation of VodafoneThree. VodafoneThree, formed by the merger of Vodafone UK and Three has gained a bigger market share compared to BT’s EE. Also, Virgin Media’s O2 bought a chunk of Vodafone’s spectrum.

BT share price analysis

The weekly chart shows that the BT Group stock price bottomed at 96p, where it formed a giant double-bottom pattern. It has now jumped above the important resistance level at 169.55p, its highest level in 2021 and 2022, confirming the breakout, as we predicted.

The stock also formed a golden cross pattern as the 50-week and 200-week moving averages crossed each other. Also, the Average Directional Index jumped to 31, a sign that the trend is strengthening.

BT Group stock’s Relative Strength Index (RSI) and the MACD indicators have continued rising. Therefore, the stock will likely keep rising as bulls targeting the psychological point at 250p. 

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