BT Group is a ‘sell' as broadband pressures remain - broker

BT Group PLC received a 'Sell' rating from Deutsche Bank, with a 140p price target against a current 222p, following a trading update that showed a 10% profit before tax decline to £468 million and a 3% revenue drop to £4.9 billion, primarily due to weaker mobile sales and challenging international trading. Despite a 169,000 decline in broadband lines, which BT deemed 'in line with expectations,' and a 1% adjusted EBITDA dip, the company reaffirmed its full-year guidance, supported by a 46% increase in Openreach full-fibre adds and cost efficiencies from a 5% workforce reduction. Deutsche Bank, however, remains bearish, citing persistent broadband pressures and BT's expectation of 900,000 fewer connections this year to competitors.

Analysis

BT Group PLC faces a significant negative sentiment from Deutsche Bank, which reiterated a 'Sell' rating and a 140p price target, implying a material downside from the current 222p level. This bearish view is anchored in persistent retail and broadband market pressures, despite some positive elements in the latest trading update. The company's Q1 results showed a 3% year-on-year revenue decline to £4.9 billion and a 10% fall in profit before tax to £468 million, driven by weaker mobile sales, challenging international operations, and higher finance costs. While BT lost 169,000 broadband lines, a figure it described as "in line with expectations," Deutsche Bank highlights the company's own forecast of losing approximately 900,000 connections to competitors this fiscal year. Mitigating these negatives, the Openreach unit demonstrated strength with a 46% increase in full-fibre net customer additions. Furthermore, BT reaffirmed its full-year guidance, supported by cost-cutting measures including a 5% workforce reduction. The appointment of a new CFO from a key competitor for 2026 also signals a long-term strategic evolution.

Key Decisions for Investors

• Investors should weigh the significant downside risk highlighted by Deutsche Bank's 140p price target, which is predicated on sustained competitive pressure and BT's own forecast of substantial broadband connection losses.
• Despite the negative headline figures, the reaffirmation of full-year guidance and the strong 46% growth in high-value full-fibre connections at Openreach may offer a counter-narrative for those with a longer-term investment horizon focused on the company's transformation.
• It is critical to monitor future net broadband connection figures to validate whether losses remain within the company's guidance or accelerate, as this metric is central to the prevailing bearish thesis.
• Consider the 2026 appointment of a new CFO from competitor Virgin Media O2 as a long-term strategic signal that could preface shifts in capital allocation or competitive strategy.