BT Group (BT.A) reaches cost savings target before schedule: Buy alert?

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BT Group (BT.A) reaches cost savings target before schedule: Buy alert?

 BT Group (BT.A) reaches cost savings target before schedule: Buy alert?
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Highlights

  • BT Group’s shares rose over 4 per cent after it reached its £1 billion cost savings target by 18 months in advance.
  • The company seems to have accelerated its cost-savings programme amid talks of a potential takeover offer from telecom billionaire Patrick Drahi.

UK based telecom major BT Group PLC’s (LON: BT.A) shares rose over 4 per cent on Monday after the company reported it had reached its £1 billion cost savings goals ahead of schedule. It turned the highest riser on the FTSE 100 index, which it is a part of, following the news.

BT Group PLC’s (LON: BT.A) share price performance

BT Group’s shares were trading at GBX 144.50, up by 4.03 per cent on 1 November at 13:23 hrs BST, while the FTSE 100 index was at 7,272.12, up by 0.48 per cent. And the telecom sectoral index was at 2,658.90, up by 1.03 per cent.

BT.A share price and volume

(Image source: Refinitiv)

The company’s market cap was at £13,777.56 million, and its one-year return was at 42.46 per cent as of Monday.

BT Group’s cost savings goal

The company confirmed it had reached its goal of £1 billion in gross annualised cost savings ahead of its schedule by 18 months.

The group had earlier planned to reach the goal by March 2023. The confirmation comes after media reports emerged over the weekend of BT reaching this milestone.

Potential takeover offer

As per some media reports, the company accelerated its cost-saving target’s schedule amid talks of a potential takeover from Patrick Drahi, a French Moroccan telecoms billionaire.

Altice UK, a French telecom and mass media company, owned by Drahi, had acquired about 1.2 billion of BT shares, worth around £2 billion on 10 June.

The share purchase took Drahi’s shareholding in the company to 12.1 per cent. However, he had clarified immediately that he did not plan on making a takeover offer to the company.

BT’s FY 2021 financial performance

According to BT ‘s FY 2021 results, its revenue was down by 7 per cent to £21,331 million, from £22,905 million in FY 2020.

And its FY 2021 profit before tax was down by 23 per cent to £1,804 million from £2,353 million in FY 2020.

The fall in revenues was due to the impact from covid-19 on its consumer and enterprise business segments.

Profit before tax was impacted due to its earnings before interest, tax, depreciation and amortisation (EBITDA), which was down by 6 per cent to £7,415 million in FY 2021 due to lower revenues, special frontline bonus, higher service costs and other factors.

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