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BT Group shares slip as Citigroup trims target price after recent results

"BT still need to weather through a number of regulatory headwinds, with most of efficiency savings likely being reinvested to modernize system and drive future efficiency improvement"

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Citigroup's analysts also highlighted a potential dividend cut, further downside risks to consensus estimates and noises around Champions League rights

Citigroup has trimmed its target price for BT Group PLC (LON:BT.A) to 205p from 220p following the FTSE 100-listed telecoms firm’s recent half-year results, having incorporated the recent loss of a contract to run Virgin Media’s mobile service.

Virgin Media announced earlier this week that it had agreed a five-year mobile deal with mobiles rival Vodafone (LON:VOD) after deciding not to renew its agreement with BT.

READ: BT holds dividend steady as cost cuts offset lower revenues

The deal, which involves more than 3mln mobile customers, ends a 20-year relationship between Virgin Media and BT-owned EE.

In a note to clients, analysts at Citi said: “Our views on BT has not changed much post Q2. We consider that both competitive dynamics and regulatory outlook are improving for BT. There are abundant cost efficiency for BT to drive long term EBITDA growth.”

“However, over the next 12 months, BT still need to weather through a number of regulatory headwinds, with most of efficiency savings likely being reinvested to modernize system and drive future efficiency improvement,” they added.

“These, together with potential dividend cut (we anticipate by 50% at FY results in May 2020), further downside risks to consensus estimates and noises around Champions League rights, leave us (to) remain Neutral on the stock,” the analysts concluded.

In mid-morning trade on Friday, BT shares were 0.3% lower at 189.86p.

Quick facts: BT Group PLC

Price: 111.35 GBX

LSE:BT.A
Market: LSE
Market Cap: £112.95 m
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