Key points
- There are two possible deals concerning the BT Sport brand
- Altice owner Patrick Drahi has increased his stake from 12.1% to 18%, sparking takeover rumours
- Cash flow increased 6% in recent results
A telecommunications giant, BT Group (LSE:BT.A) is an instantly recognisable British firm. Boasting brands like BT Sport and EE, the company is a FTSE 100 stalwart. With the potential sale of BT Sport, takeover rumours and some interesting financial results, I think the BT share price could be about to soar. Should I now be adding this business to my own portfolio? Let’s take a closer look.
Sales, takeover rumours, and the BT share price
Just this month, the firm announced it was in the final stages of selling its Premier League rights to US streaming service DAZN. This deal, thought to be worth $800m, would be a welcome cash injection for BT, which has a not insignificant debt pile of around £18.2bn.
This transaction is complicated, however, as it has reportedly stalled. This is primarily because of the possibility of a joint sports venture with Discovery Communications. This would be an equal venture, with BT adding Eurosport UK to its portfolio of channels. While this may complicate the DAZN deal, it may also be lucrative and its conclusion may cause the BT share price to soar.
Rumours have also been swirling since December 2021 about a possible takeover of BT. The talk increased after Patrick Drahi, the owner of European telecommunications giant Altice, increased his stake in BT from 12.1% to 18%.
This purchase attracted a lot of attention. Many are wondering if Drahi is steadily increasing his stake to avoid the costs associated with a bid offer. In any case, we will not uncover his true intentions until the summer, due to UK takeover regulations. While a successful takeover would likely see the BT share price take off, we will need to wait a little longer to find out.
Mixed financial results
In the recent financial report for the nine months to 31 December 2021, BT reported a mixed bag of results. During this period, profit fell by around 3% and revenue dropped by 2%. The firm stated that this was down to “Covid-19 and supply chain problems”. For me, these appear to be short-term issues that will subside with time.
On the flip side, cash flow increased markedly by 6%, from £830m to £878m. This means that the company has the luxury of cash with which to expand or strengthen its balance sheet. This should have a very positive impact on the BT share price.
The exciting prospect of either a sale of the BT Sport brand or a joint venture might indeed the send the BT share price flying. With more information expected soon, I will be buying shares now. While the takeover rumours are interesting, and would positively impact the share price, I am more focused on the cash flow improvements that place the firm in a stronger financial position.
Should you invest £1,000 in BT right now?
Before you consider BT, you’ll want to hear this.
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Andrew Woods has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
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