BT Group: Relative Discount But Not Terribly Attractive

(5min)

Summary

  • BT Group is burdened by significant CAPEX, around 50% of its EV, impacting its financial flexibility compared to peers like Swisscom.
  • Despite cost control efforts and EBITDA growth, rising net finance expenses and debt pressure in net profits make BT less attractive.
  • Heavy regulation and competitive market conditions limit BT's ability to achieve supernormal profits from its FTTH investments, which therefore become a bigger burden.
  • The modest discount in EV/EBITDA multiple relative to Swisscom doesn't sufficiently offset the financial and operational challenges BT faces.
  • Looking for more investing ideas like this one? Get them exclusively at The Value Lab. Learn More »

A Openreach service van parked at the side of a street.

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BT Group (OTCPK:BTGOF) is still dealing with considerable CAPEX, as in our last coverage. Even considering that outstanding CAPEX burden, there is a fair bit of discount relative to less beleaguered peers like Swisscom (

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The Valkyrie Trading Society is a team of analysts sharing high conviction and obscure developed market ideas that are downside limited and likely to generate non-correlated and outsized returns in the context of the current economic environment and forces. They are long-only investors.

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