BT share price could surge to 175p as a golden cross nears

The BT Group (BT.A) share price has moved sideways in the past few days even as the management highlighted strategies to simplify its business. It also reacted mildly to its half-year financial results, which sent mixed signals about its operations. BT was trading at 142.10p on Nov. 7, a few points below the year-to-date high of 151.85p.

BT Group turnaround is continuing

BT Group, a former monopoly in the UK telecom industry, is going through a major shakeup as the management seeks to optimize its profitability.

Its biggest part of this turnaround was announced in 2022 when the management announced plans to cut thousands of jobs and replace them with artificial intelligence. It also exited BT Sports by working through a joint venture with Warner Bros.

This week, the company continued with this strategy by announcing plans to sell its global business and shift its focus to the home market.

This is a strategy that other companies have used successfully in the past. For example, Tesco share price has surged hard after it exited most of its international business to focus on its home market.

The challenge, however, will be how to find buyers for some of its international businesses. Analysts expect that selling its Radianz business will be relatively easy since it is already working with Citigroup to find a buyer. Radianz is part of BT’s business division that has continued to underperform.

The other potential strategies to unlock value in BT’s asset disposals will be joint ventures and partnerships.

BT earnings

BT share price has held steady after the company published mixed financial results. The results showed that the slowdown continued in the last half of the year. Its revenue dropped by 3% to over £10.1 billion, while its profit dropped by 10% to £967 million.

Most of BT’s weakness was still in its business solutions division whose revenue fell by 6% to £3.8 billion. Its consumer segment also dropped by 2% to £4.8 billion. 

These two divisions were partially offset by a 2% in Openreach, its fibre business, which continued adding customers. In a statement, Alison Kirby, the CEO said:

“We are confirming our EBITDA, capex and cash flow guidance for FY25, albeit on lower revenue guidance. We remain firmly on track to meet our long-term cost savings and cash flow targets, and today announce an interim dividend of 2.40pps. The accelerated modernisation of our operations, combined with a focus on connecting the UK, puts us in a strong position to generate significant value for all our stakeholders.” 

These numbers mean that BT still has a long way – and a narrow path – to return to growth. As a result, the company will need the turnaround strategy to work out well, which will help to support its dividend payouts. 

BT Group share price analysis

BTchart by TradingView

The weekly chart shows that the BT share price has been in a bullish trend in the past few months. This rebound happened after Kirby shared her strategy in May this year and after Carlos Slim bought a stake.

Now, the stock has pulled back, and is about to form a golden cross pattern, which often leads to more gains. This pattern is characterised by the crossover of the 200-week and 50-week movig averages. 

The upcoming cross is notable because it is happening on the weekly chart. Therefore, it means that the stock will likely have a strong bullish breakout, potentially to 175p, the highest level since 2021. This view will become valid if the price moves above the crucial resistance point at 151.85p, its highest level this year.

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