BT Group (BT.A) shares climbed as high as around 239p earlier in 2026, a level not seen in years, before slipping back to around 192p today.
That pullback matters because it comes despite genuine operational progress. Full fibre now reaches more than two thirds of UK premises, EE has been rated the best mobile network in the country three times over, and the firm’s cost transformation programme has already delivered £1.5bn of annualised savings.
The results for the year to 31 March 2026 help explain why the shares have cooled rather than kept climbing.
Net debt actually crept up to £20.0bn from £19.8bn, and net financial debt rose to £15.8bn from £15.2bn.
Normalised free cash flow fell 6% to £1.51bn, hit by higher capital spending, rising interest costs and the absence of a prior year tax refund. BT still expects that figure to reach around £2.0bn in FY27 and £3.0bn by the end of the decade, but that’s a multi-year climb rather than an immediate re-acceleration.
Alongside this, the gross IAS 19 pension deficit widened to £4.2bn from £4.1bn, reflecting weaker asset returns and updated mortality and inflation assumptions, which adds another layer of caution to the balance sheet story.
Adjusted earnings per share fell 3% to 18.3p, and adjusted EBITDA was essentially flat.
Fibre Growth Supports the Long-Term Recovery Case
BT’s investment case still rests heavily on the progress made across its network businesses.
The expansion of full fibre coverage provides a stronger foundation for future revenue growth, while the retirement of the old PSTN network should gradually reduce some of the pressure from legacy services.
The company’s cost transformation programme also remains important, with savings expected to improve cash generation over time as capital spending requirements begin to moderate.
However, the pace of improvement remains the key question for investors. BT is moving in the right direction operationally, but the financial benefits are expected to arrive gradually rather than immediately.
Dividend Support But Valuation Debate Remains
Even after the retreat from 239p, the shares still trade on roughly 10-11 times adjusted earnings at 192p. That’s above where BT traded for much of the past several years, when a heavier debt load and slower fibre progress kept the rating compressed.
There is some support from the dividend, with the board raising the full year payout to 8.32p, up 2%, and adopting a new policy targeting low to mid single digit annual growth until leverage metrics consistent with a BBB+ credit rating are reached.
That’s a sensible, disciplined approach, but it also signals the firm isn’t yet ready to reward shareholders more generously.
Broker views are split too. JPMorgan Cazenove and Berenberg Bank remain constructive, with price targets around 300p and above, while UBS, Deutsche and Citigroup have all carried Sell ratings with targets closer to 140-175p over the past year, and that divergence itself tells its own tale about where the shares sit today.
BT Faces a Balance Between Recovery and Risk
The bull case rests on continued fibre take-up, easing voice headwinds after PSTN closure, and further cost savings feeding through to free cash flow.
The bear case points to a debt pile that isn’t shrinking, a pension deficit moving the wrong way, and a valuation that already reflects a good deal of the recovery story.
With the shares having already pulled back from their 2026 peak yet still carrying a heavier rating than their own history, the risk-reward looks more balanced than compelling from here.
