In this article I am looking at why I believe BT Group (LSE: BT-A) (NYSE: BT.US) is a snip at current price levels.
An exceptional value selection
Shares in telecoms colossus BT Group have endured tremendous weakness in recent months, the stock having conceded 9% since hitting February’s record high of 418.1p. This depreciation has left the company dealing on a P/E multiple of 13.2 for 2014, levels which I believe represent terrific value given its stellar record of earnings growth and enviable expansion prospects.
BT has invested heavily in its fibre network to boost broadband demand, and its multi-year scheme is undoubtedly paying dividends. During October-December the firm secured around four-fifths of all new broadband additions, and this figure is likely to 
head higher as its fibre-laying programme chugs along — BT is looking to have 90% of the UK connected to its network eventually, up from around two-thirds at present.
The firm’s television operations are also making significant headway, and BT confirmed last month that it plans to offer its broadband customers free access to its sports channels for a second consecutive year, not a huge surprise given the undoubted success of this strategy. Five million homes now subscribe to BT Sport, making it “one of the fastest growing TV services ever launched in the UK.”
BT has thrown plenty of capital at taking on sports behemoth British Sky Broadcasting, securing the rights to show top-flight football across Europe as well as other flagship sporting tournaments from Aviva Premiership rugby union through to Ultimate Fighting Championship cage fighting.
Having shelled out almost £900m for exclusive live rights to UEFA Champions League and Europa League football from 2015-2018, BT is now expected to up the stakes in the battle to build its rights to the FA Premier League, a strategy which could deliver a hammerblow to Sky’s stranglehold on sports broadcasting in the UK.
City analysts expect BT to record earnings growth of 3% this year, a figure which creates the aforementioned earnings multiple of 13.2. And current forecasts point to an additional 8% expansion in 2015, a scenario which drives the P/E multiple still lower to 12.2.
The telecoms play has shown that it has both the nous and the financial clout to succeed in the ‘triple-play’ services sector across the telephone, broadband and telephone spaces. In my opinion the company is in terrific shape to experience solid earnings growth in coming years.
