BT's stock looks mighty cheap after trading near its historic lows just a few months back. But can it muster enough market enthusiasm to score a rebound this year? If you're interested in buying BT shares for the first time, then you might want to read this page first. It offers you an overview of the company and its business and provides an analysis of its investment potential.
Table of Contents
Learn How to Buy BT Stocks in 3 Easy Steps
Find a broker
The first thing you need to do is open an account well-regulated broker that will provide you the platform and tools to start trading BT shares.
Analyze BT chart
You'll find a charting application from your broker's platform, which you can use to analyze BT's stock price movement. Use this to find a good price level to enter a trade.
And once you determine the entry price, the last thing to do is place your first BT trade.
BT Company Overview
BT Group plc is a British telecommunications holding company that provides communication services worldwide. In the U.K., it's the largest provider of fixed-line, broadband, and mobile services and operates in these business segments: Consumer, Enterprise, Global Services, Openreach, and Other.
BT was the top 19th British company by revenue and was among the top 100 digital companies in the world in 2019, according to Forbes. Its stock currently trades at GBX 137.25, giving BT a market value worth £13.61 billion
The company is currently headquartered in London, and its CEO since 2019 is Philip Jansen.
BT Business Model and Revenue Streams
BT's total revenue in 2020 totaled £22.9 billion ($31.9 billion), which was obtained from its core business segments. Its Consumer Organizational Unit leads the other segments in revenue contribution; the latest quarter (Q2 FY 2020/21) generated £2.5 billion ($3.5 billion). Under Consumer, BT owns brands EE Limited and Plusnet and provides broadband, home phone, and TV services to the U.K.
Its second-largest revenue stream comes from its Enterprise segment, which, in the same quarter, produced £1.35 billion ($1.9 billion). Enterprise connects business customers and public sector organizations using BT's communications and IT solutions.
BT's Openreach comes in at third, with £1.29 billion ($1.80 billion) in Q2. This segment maintains the telephone cables, ducts, cabinets, and exchanges that connect U.K. homes and businesses to the national broadband and telephone network.
And finally, its Global segment contributed £926 million ($1.28 billion). This is their business segment that provides global security, cloud, and networking services to different companies worldwide.
History of BT
BT's beginnings date back to 1846 when one of the first telecommunications companies in the U.K. were introduced; one, in particular, is the Electric Telegraph Company. These companies would merge and get taken over by the Post Office and subsequently become privatized in 1984 under the name British Telecommunications plc. The Government would still have half of the stakes in the company until it eventually sold the rest in 1991 and 1993.
Between 1994 and 2000, BT had two bids to penetrate the North American market through a joint venture called Concert Communications Services, which was originally worth $1 billion. After failing to forge two business relationships, initially with MCI Communications and later AT&T, Concert's assets would eventually be divided between AT&T and BT to be merged into regional operations in 2002. BT became incorporated in 2001 as BT Group plc.
BT made several acquisitions in 2005, including Infonet, a telecoms company in California, Albacom in Italy, and Radianz from Reuters (now known as BT Radianz). In the same year, Openreach was created but didn't open for business until January of the following year. In 2007, the company acquired Plusnet for a deal valued to be worth £67 million, adding 200,000 more customers. The company would also announce that it had connected its ten-millionth broadband line that year, surpassing its five-million target in 2006.
BT introduced MyDonate in 2011. MyDonate is a fundraising service for U.K. charities. In 2016, BT officially acquired EE for £ 2.5 billion and became a second consumer division. Two years later, it announced structural changes that combined its BT Business and Public Sector and BT Wholesale and Ventures divisions into one: BT Enterprise.
In 2020, its stock lost 30% in value, which concluded another year in decline adding to the trend that began in 2016.
Brokers That Offer BT Shares
Here are our top choices of online brokers that offer BT stocks on their platform. Based on our review, we found that these brokers provide the best support and analytical tools to trade BT as well as other stocks.
Should I Invest in BT Stock?
There are risks to bear in mind in investing in BT, such as intensifying competition for market share, notably with the O2 and Virgin Media merger expected to finalize this year. Another one is the technological changes within the telecom industry that pose a challenge for all firms involved in the space -- not to mention its price's currently depressed levels. But despite all of this, BT remains the leader in the telecom industry in the U.K., so it's hard to count out a company like that with such leverage in the market.
And it would help if we take a look deeper at its investment potential.
BT Stock Investment Potential
BT's depressed levels aren't all that bad as this could suggest a likely bottoming out could be taking place. Analysts have also increased their price target of BT (GBX 190 to 200), particularly Credit Suisse, noting that it is reaching an inflection point and could be on track to make "one of the strongest" post-COVID rebounds.
The Swiss bank's upgrade stems from the high expectations of an ongoing roll-out of high-speed internet, which is measured in FTTP connections.
From a technical perspective, several indicators are also bullish on both daily and weekly timeframes, including long-term moving averages (100 and 200), the MACD, and Momentum Indicator.
What Kinds of Investors Should Include BT in Their Portfolios?
Perhaps the biggest turn-off about BT shares is its growing debt pile that has caused the market to repeatedly sell its stock despite reporting net profits for years. Its total debt in 2020 ballooned to £25.8 billion, exceeding its reported revenue.
And investors who'd find a fit for BT shares in their portfolio are those confident in BT's prospects, especially as it’s now involved in the 5G conversation after it announced investment plans last year. Investors would also be glad to know that the company stands to benefit from the "super-deduction" policy, which could reduce their tax bill by 130% of the investment cost since Openreach has spent millions on upgrading the U.K. broadband network to FTTP.
How Much Should I Invest in BT
The exact amount to invest in BT or any stock, for that matter, is entirely at your discretion. Since you know how much BT is per share and now its growth potential (because you've read this article), you'll be able to determine how much is a comfortable sum to leave exposed to this company.
The only thing you have to consider now is if the amount you're investing will not break the bank if things don't go as planned. It would help if you also thought about how frequently you will be putting funds in this stock. For instance, do you plan on making a lump sum or regular purchase?
After all of these are defined, it'll be much easier to determine the appropriate amount to invest in this individual stock.
How to Buy Shares in BT Stock?
So, as stated, you need the help of a broker to access BT shares and trade them. To get started with your account application, you first need to fill up an online form from your broker's website. Along with this form, you also need to submit some necessary supporting documents. The approval time will vary from broker to broker but usually takes a few working days, especially if the submitted requirements are in good order.
When it's approved, you can proceed with funding. Brokers have different funding methods, so all you have to do is choose the one that is the most convenient for you. Common deposit methods include electronic bank deposits, wire transfers, check, and account transfers from another firm.
And lastly, when your trading account reflects the amount you deposited, you can now initiate your first BT trade.
Buy BT Shares Using a Broker
Your application takes a while to get approved because your broker needs to verify the personal details and supporting documents you submitted. Brokers need to confirm that it is you who's opening the trading account, so they check if you have provided accurate identity proof. Usually, brokers accept your Tax Identification Number (TIN), Social Security Number (SSN), passport, or driver's license.
Apart from these, the application form may request you disclose a rough estimate of annual income and net worth. It may also ask about your investment objectives, risk tolerance, employment status, and occupation.
Now, don't get turned off by the fact that your broker may request so much information. This only proves that they are compliant with the regulators that oversee their operation. It also means that they take the necessary measures to adhere to anti-money laundering policies, anti-terrorist financing requirements, tax laws, and record-keeping procedures.
Buy BT Shares With a Direct Stock Purchase Plan (DSPP)
Direct Stock Purchase Plans or DSPP is another great way to purchase shares. However, this method doesn't require a middleman (i.e., your broker) to process your share purchases. But instead, you are buying directly from the company.
The advantage of this is that you don't have to pay a fee per transaction, but you have to open an account for each company you want to buy. And along with that are the initial setup fees and initial investment requirements that vary by each company. With this method, it'll be much harder to build a diverse portfolio.
BT offers something similar and is called a Dividend Reinvestment Plan or DRIP. A DRIP reinvests the cash dividends you receive into new shares of BT automatically. If you're interested in using this method to invest in BT, you can send your inquiries directly to its website or contact its transfer agent.
Frequently Asked Questions
BT is presently trading near its all-time lows and a few months back reached a price level it hasn’t touched since 2009. Analysts also expect the stock to have great upside potential this year, with the highest price target at GBX 260.
BT Group is a consistently profitable company. In 2020, it garnered £1.73 billion ($2.41 billion) in net income.
BT's average daily volatility (GBX 4.87) and trading volume (16.54 million shares) are sufficient to allow any trader to profit from short-term trading.
The platform most suited for trading BT shares should have a complete set of technical analysis tools to accurately analyze its price movements.
BT GROUP follows London market trading hours, which is between 3 am to 11 am ET.