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(Alliance News) - BT Group PLC should have emerged as one of the pandemic's biggest winners, as its offering caters to customers staying indoors, but AJ Bell analyst Russ Mould said the company failed to capitalise.
What's more, the telecommunications provider's decision to pursue a joint-venture for its sports broadcasting arm could be an "admission of at least partial failure", Mould said.
BT shares were 4.7% lower at 186.35 pence each in London on Thursday afternoon.
"There's a world in which BT emerged from the pandemic as a big winner. Demand for reliable broadband went through the roof as office dwellers worked from home while lots of people were looking to be entertained at home – so its TV offering should have been in demand too," AJ Bell's Mould added.
"However, a legacy of public ownership and a large rather unwieldy set of operations means BT has all the agility to take advantage of market opportunities of an African elephant and its shares are only a smidgen higher than their pre-Covid levels."
BT shares have rallied 88% from their pandemic depths but are down from late 2019, when they traded above 200p.
On Wednesday, BT posted an earnings fall, doing the stock no favours.
In the nine months that ended December 31, revenue fell 2.4% to GBP15.68 billion from GBP16.06 billion a year earlier. Pretax profit declined 3.4% to GBP1.54 billion from GBP1.59 billion.
BT now expects group adjusted revenue to fall 2% on an annual basis. Adjusted revenue declined 6.3% to GBP21.37 billion in the financial year ended March 31, 2021. During that year, "retrospective regulatory matters" added GBP39 million to adjusted revenue.
The FTSE 100 listing added that it has entered into exclusive talks with the US's Discovery, which owns the Eurosport UK brand. It will be a 50-50 joint venture.
BT Sport launched to hefty fanfare in 2013. It aimed to disrupt Sky's dominance in UK sports television.
BT Sport has emerged as a serious rival to Sky Sports. From 2015, it snapped up the lucrative television rights to the two premier European football competitions, the UEFA Champions League and UEFA Europa League.
"Having made a big pitch for a slice of the football pie some years ago, battling out with Sky for rights to Premier League and Champions League football, BT now wants to find a partner to share the huge costs involved. Eurosport-owner Discovery looks to be ready to step in and this would be a positive development for BT even if it would represent an admission of at least partial failure for the bold sporting rights strategy launched a decade ago. Though if you were feeling kind, you could say it did the job of stemming the loss of broadband customers to Sky," Mould added.
BT said revenue in the nine months to December 31 fell 2.4% to GBP15.68 billion from GBP16.06 billion a year earlier. Pretax profit declined 3.4% to GBP1.54 billion from GBP1.59 billion.
BT now expects group adjusted revenue to fall 2% on an annual basis. Adjusted revenue had declined 6.3% to GBP21.37 billion in the financial year ended March 31, 2021.
In December, billionaire telecom tycoon Patrick Drahi's Altice lifted its stake in BT to 18% from 12% previously.
Altice said it "restated its position to the board" of BT that it doesn't intend to make an offer and will be bound by that statement under UK takeover rules, meaning it cannot make a bid for the next six months, expect under defined exceptions.
Still, the move raised hopes of change and an improved performance by the company.
"For investors, the competitive environment remains intense, while shareholder returns are currently not what they were. On the upside, the original 12.1% stake taken by Patrick Drahi has subsequently increased to 18%, with hopes of corporate change at BT persisting," interactive investor analyst Keith Bowman commented.
By Eric Cunha; ericcunha@alliancenews.com
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