The FTSE 100 was a sea of red on Tuesday. As I write, the London index is down 155 points, around 2%. But some shares have been briefly popping into positive territory, with BT Group (LSE: BT-A) among them. The BT share price was a fraction down at 2pm, but it had shown small gains during the morning.
Looking back over 2021 so far, BT shares have gained 29%. And BT’s recovery since the worst of last year’s crash is among the FTSE 100’s best. We’re looking at an 80% increase since a low point in September. And since the pandemic hit in February 2020, the BT share price is already in positive territory, up 11%.
That does hide a pretty rotten longer-term performance for BT though, as the shares had been on a long slide well before the pandemic arrived. Over the past five years, BT shares have lost a whopping 61% of their value, even including this year’s gains. They say past performance is not an indicator of future performance. For the sake of BT investors, I do hope that’s true in this case.
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BT share price recovery
So, are we finally looking at a long-awaited comeback for the BT share price? We should get some clues on Thursday, when BT is due to release full-year results.
Over the past few months, we’ve had a string of news stories. Most recently, and perhaps most intriguingly, is last month’s update on BT Sport. The company told us that “early discussions are being held with a number of select strategic partners, to explore ways to generate investment, strengthen our sports business, and help take it to the next stage in its growth.”
In other words, BT is looking to sell off part of its TV sports business. Amazon has been mentioned by some as a potential partner, and ITV looks to be in the picture too. If anything comes of this, I’d see it as a potentially good move. I haven’t been too impressed by the way BT Sport has been managed, especially when it comes to some of the sums the company has stumped up for football rights in the past. And any cash injection that comes from it should help BT’s main telecommunications business. And that, the firm’s core strength, is what I see as key to long-term BT share price growth.
Cautious, but not buying yet
But, while I’m generally optimistic, it’s going to take more than one set of results to get me to buy BT shares. Over the past couple of decades, I’ve not been impressed by BT’s management of cash flow and debt. Even at the third-quarter stage, at 31 December, BT was carrying net debt of £17.3bn. Granted that was down nearly a billion from a year previously. And it was at the end of the Covid-ravaged 2020. Capital expenditure was on the high side too, at £3bn.
I’ll be looking at both of those in the upcoming results. But, more importantly, I’m waiting to see how any potential BT Sports deal will help with cash flow, expenditure, and debt. That’s what I think could boost the BT share price in the longer term.
