BT Group Plc (LON: BT.A) on Thursday i.e. 30th January 2020, released a trading update for the nine-month period ended 31st December 2019, according to which the company would be hit financially by the new government regulations related to nationâs security on Huawei 5G role.
The British governmentâs decision to restrict the high-risk Chinese vendorâs involvement in the 5G networks could be a setback for the UK based telecom group, to the tune of Â£500 million, which will be spread over five years. The British Group may have to review its 5G rollout plans after the United Kingdomâs move on the Chinese telecom company.
The Westminster revealed that Huaweiâs supply of elements forÂ the countryâs fifth-generation mobile infrastructure should be restricted to the non-core parts of the network, with a cap of 35 per cent. These vendors are strictly prohibited from sensitive locations such as military bases.
Further, in its trading update, the British telecom company reported revenue of Â£17,246 million during the period, and adjusted revenue was recorded at Â£17,192 million, both down by 2 per cent. This decrease can be attributed to ongoing headwinds from regulation, competition and legacy product declines. However, these were partially offset by increased handset sales in Consumer, growth in new products and services and higher rentals derived out of fibre-enabled products and Ethernet.
The Groupâs adjusted EBITDA was down by 3 per cent to Â£5,900 million during the nine-month period. This can be attributed to reduced revenue levels, higher spectrum fees, higher cost of operations. However, there was some sort of relief from reduced costs due to restructuring and transformation programmes.
During the period, the companyâs profit before taxation was around Â£1,911 million, and the adjusted profit before taxation was around Â£2,136 million.Â The profit of the Group was impacted by upfront interest expense due to lease liabilities recognised in association with IFRS 16 standards.
The Groupâs normalised free cash flow was down by 42 per cent to Â£1,000 million during the period as the cash capital expenditure increased on account of higher interest and tax payments and working capital and deposits made for UEFA club football rights. The Capital expenditure of the group was up by Â£251 million to Â£2,877 million, driven by fixed and mobile network investment.
The Groupâs 5G services are now live in 50 plus locations. The customer-facing unit, Openreach accelerated FTTP build at 26 thousand premises passed per week. The Consumer fixed ARPC was down by 4 per cent year on year in voice revenue year on year.
Business overview: BT Group Plc
London, the United Kingdom based Telecommunications company, BT Group PlcÂ (BT.A), fixed Line services is the primary business of the telecom company. BT Group plc is a division of British Telecom.
The companyâs offering includes internet and broadband services, television and mobile products as well as broadcasting services and solutions related to information technology needs.
The Group hosts many broadcasting networks such as BT Sport, the BT News and many others. Under the pretext of three of its brands called, BT, EE as well as PlusNet, the company operates its consumer segment through 600 plus stores and has more than 30 million customers. The Groupâs aim is to make a better world by using the power of communication. The company provides IT and telecom services globally for customers on the move, at work, or at home. In addition, it provides converged fixed-mobile products and services.
The Group possesses many customer-facing units such as Consumer, Global & Openreach and Enterprise. For the year ended 31 March 2019, BT Group's reported revenue was recorded at Â£23,428 million with reported profit before taxation being recorded at Â£2,666 million.
BT Group-Stock Price Performance
Daily Chart as at Feb-03-20, before the market close (Source: Thomson Reuters)
At the time of writing (before the market close, at 11:55 AM GMT), shares of the BT Group PLC were trading at GBX 164.98 and increased by 2.52 per cent against the previous day closing price. The shares of the company got admitted for trading on the Main Market of the London Stock Exchange on 3rd December 1984. The total M-cap (market capitalisation) of the company stood at Â£15.90 billion with an annual dividend yield of 9.57 per cent.
Daily Traded Volume Summary
The 5-day average daily traded shares, which exchanged hands were recorded at 45,247,871.00, and was approximately 82.59 per cent more than the 30-day average daily traded shares 24,779,894.50, which exchanged hands at the LSE (London Stock Exchange). At the time of writing, before the market close, todayâs traded volume of the shares of the company was around 9,255,822 and number of trades executed stood at 3,734 at the LSE (London Stock Exchange).
52-week High/Low range
In the past 52 weeks, shares of the BT Group have hovered between a high price level of GBX 237.97 (as on 6th February 2019) and a low-price level of GBX 157.67 (as on 27th August 2019). At the current level of trading, as quoted in the price chart, shares traded around 30.67 per cent below the 52-week high and were 4.64 per cent above the 52-week low.
Price Performance (in percentage)
The shares of the BT Group have delivered a negative price return of 30.76 per cent on a Year on Year (YoY) basis, slightly better compared to the benchmark index, as the benchmark index gave 33.77 per cent negative return over the same period. In addition, the stock has given a negative price return of approximately 16.38 per cent on a year-to-date (YTD) time frame and was down by approximately 16.38 per cent in the last one month.
Simple Moving Average (SMA)
From the Simple Moving Average standpoint, shares traded below the 200-day simple moving average price. In addition, the shares traded below its 60-day and 30-day SMA price points.
Relative Strength Index (RSI)
The RSI indicator for the shares of the company for the 3-days, 9-days and 14-days was recorded at 11.27, 18.00 and 22.95, respectively. Also, the stockâs 30-days RSI was recorded at 33.44.