BT Group|Guidance Held, Profit Falls Again

One Trading Update, Two Headlines

BT Group published its first-quarter trading update on Thursday, and two wire services read it in opposite directions. One headline said BT had lowered its full-year guidance. Another, describing the very same release, said BT Group had maintained it. Both are technically defensible, and that is exactly the problem for anyone trying to decide what today's numbers mean.

The underlying figures are unambiguous. Pretax profit from continuing operations fell 4.0% to £505 million, from £526 million a year earlier. Adjusted EBITDA slipped 0.8% to £2.01 billion, and adjusted revenue edged down 0.1% to £4.32 billion. Shares in BT fell 0.7% to 194.35 pence on the update, a decline chief executive Allison Kirkby framed as consistent with a solid start to the year.

Management's own language, a solid start, sits directly against a fourth straight quarter of declining profit. Fibre and 5G growth are real and measurable, but they are not yet enough to lift the headline numbers. The question this update actually poses is whether that growth is early-stage traction or a story management needs told a certain way while the harder metrics move the other direction.

Why the FY2027 Target Shrank

The number that actually moved is the forward guidance range itself. BT's FY2027 adjusted revenue outlook now stands at £17.1 billion to £17.6 billion, down from a prior range of £19.0 billion to £19.5 billion. Adjusted EBITDA guidance similarly narrowed to £8.1 billion to £8.2 billion, from £8.2 billion to £8.3 billion. That is roughly a two-billion-pound reduction in the top-line target for a single fiscal year.

BT's own explanation is that the shrinkage is structural, not operational. Last month, BT and Verizon Communications announced a fifty-fifty joint venture combining their international businesses, with Verizon paying BT an equalisation payment of 625 million dollars. As a result, BT's international unit is now booked as a discontinued operation, and the restated guidance excludes it entirely. On that reading, the smaller number is an accounting consequence of a deliberate carve-out, not a downgrade of BT's UK trajectory.

That framing is only partly reassuring. BT's UK services revenue guidance for FY2027 was indeed left unchanged, at £15.1 billion to £15.4 billion, which supports management's claim that the core domestic business is stable. But within the same quarter, Openreach broadband lines fell by 192,000, even as fibre net adds hit a record 574,000. The company is replacing customers faster than it is losing them in fibre terms, but the underlying broadband base is still shrinking in absolute lines, a detail the maintained-guidance framing does not resolve.

A Stock Split Between 300 Pence and 175

Analysts covering BT are not converging on an answer either. Berenberg reaffirmed a 300 pence price target in a note published on 14 July, citing improving consumer trends and growing confidence, a level that would imply roughly 53% upside from current prices. UBS, in a note from May that remains current, holds a sell recommendation with a target of 175 pence. Both notes were written after BT's full-year results were public, and they reach opposite conclusions from the same disclosure set.

BT shares touched a five-year high of 242 pence in May, having nearly trebled from their mid-2024 lows, and have since fallen back roughly 19%. For someone already holding the stock, that retreat sits between two live theses: the Berenberg case that this is a pause in a genuine turnaround, and the UBS case that the rally overran the fundamentals. For someone on the sidelines, the same data supports either buying the dip or staying out until the debt picture clarifies.

The debt load is the variable both camps have to explain around. BT's net debt has hovered near £20 billion for an extended period, with little visible reduction, even as the company reiterates cash-flow targets of around £2 billion by FY2027 and £3 billion by the end of the decade. Bulls treat the debt as manageable against improving cash generation. Bears treat it as the ceiling that caps how much of that cash ever reaches shareholders.

The One Number That Will Settle It

One figure in this update is not open to competing interpretation. BT's full-fibre footprint reached 23.4 million premises in the quarter, an increase of 514,000, keeping the company on track for its stated target of 25 million premises by December 2026. Take-up on that footprint stands at 40%, with retail FTTP connections up 1.1 million year on year to 4.8 million.

That build-out target is the checkpoint that will actually discriminate between the two readings of this update. If BT hits 25 million premises on schedule and take-up keeps climbing, the maintained-guidance framing gains real support, because the fibre transition would be converting into revenue growth strong enough to offset the voice decline permanently. If the build slips or take-up plateaus, the profit decline seen this quarter stops looking like a rounding effect of the Verizon carve-out and starts looking like the underlying trend. Nothing in today's release settles that question. December's fibre count will.