Source: Sharecast
Berenberg noted that BT had seen service revenue grow by 1.6%, the first quarter of growth seen this year, while subscriber growth was said to be strong on most fronts during the year, excluding-postpaid mobile in Q4, while churn was low and average revenue per user trends recovered.
The German bank, which said Openreach remained the key driver of BT's numbers, also highhlighted that underlying earnings were "flattered" by the comparison to a weak Q425, but said revenue growth was "solid" as ARPU growth offset line losses to the alternative carriers.
"Broadband line losses look set to continue for three years on our forecasts, albeit at a slowing rate, but ARPU growth of more than 4% in Q4 suggests to us that Openreach is not having to work quite as hard as we had feared to combat the alts' threat," said Berenberg, which has a 'buy' rating on the stock.
"We still include a return to cost-based access price regulation post-2031 in our forecasts. However, deregulation is looking increasingly likely, in our view (we watch for any indication that Openreach will be allowed to launch geographical discounts in selected areas in time), and we now include a 50% probability of this upside scenario (GBP3.50-plus) in our price target."
Reporting by Iain Gilbert at Sharecast.com