Towards the end of 2018, it looked to us as though a recovery was on the cards for BT (BT.A), which prompted us to include the (contrarian) stock in our Tips of the Year issue.
We noted that incoming chief executive Philip Jansen would face pressure to address BT’s cash flows and dividend, partly due to its hefty pension deficit. But we also noted Mr Jansen's reputation for restructuring businesses and that broader economic concerns could enhance the defensive appeal of the telecoms giant.
But, as explored within this week’s upcoming Income Majors feature, this year has seen mounting pressure on BT to increase spending, while competition in fibre has been growing. Some brokers have been slashing free cash-flow forecasts in response. Given the stretched balance sheet, this is precisely what we did not want to see happening.
