In sharp distinction to final 12 months, BT (LSE: BT-A) shares have had a reasonably risky begin to 2025. Immediately’s (30 January) buying and selling replace from the UK’s largest cell and broadband operator has achieved nothing to vary that.

So, what’s troubling traders?

Blended numbers

Effectively, the figures have been hardly pulse-quickening. Adjusted revenues dipped 3% to £5.2bn in Q3 following decrease gross sales on the firm’s Client and Enterprise models.

On a extra upbeat word, income at BT’s Openreach division elevated by 1% to £1.5bn with 17m Fibre to the Premises (FTTP) connections accomplished by the top of December. A goal of 4.2m premises within the present monetary 12 months has been set with the objective of 25m being hit on the finish of 2026.

CEO Allison Kirkby was additionally attempting to place a optimistic spin on issues, highlighting that the corporate’s “value transformation greater than offset decrease income exterior the UK and weak handset gross sales“. The sale of its information centre enterprise in Eire — a part of BT’s technique to fully concentrate on its dwelling market — was additionally careworn.

Alternative knocks?

All issues thought-about, it feels just like the market has overreacted a contact, particularly as BT believes it’s nonetheless on target to fulfill full-year expectations.

Immediately’s share price fall must be put in perspective too. This firm considerably outperformed the index in 2024.

Along with an increase of virtually 17%, traders have been handled to dividends of 8p per share. Maybe some profit-taking — if that’s what we’re seeing — was inevitable.

The query, nevertheless, is whether or not BT can proceed to do the enterprise over the long run from right here. Effectively, that is the place issues get a bit difficult.

Low cost…for a purpose?

On the one hand, this nonetheless appears to be a really low-cost inventory. A price-to-earnings (P/E) ratio of simply 8 implies that BT shares nonetheless commerce far under the common valuation throughout the FTSE 100.

Based mostly on the present price, the £15bn cap additionally boasts a juicy 5.5% dividend yield. That’s greater than a fund monitoring the return of the UK’s largest firms will ship.

Nonetheless, the prospect of more money does include an additional dollop of threat.

One main weak point of the funding case is that BT’s steadiness sheet nonetheless creaks beneath an infinite quantity of debt. That is hardly stunning provided that administration has dedicated to throwing billions of kilos into its roll-out of full-fibre broadband. The thought is that it will all repay with greater earnings ultimately. Maybe it’ll. However shareholders might see fairly a little bit of volatility alongside the way in which if we get any inflationary shocks.

Higher buys elsewhere

Contemplating the above, it’s not stunning that analysts are predicting a negligible rise for dividends in FY26. To me, near-stagnant payouts aren’t significantly engaging. BT doesn’t have the very best report of sustaining payouts when the UK economic system wobbles both.

Low cost at face worth as it might be, I’m nonetheless not tempted to purchase. Final 12 months’s beautiful acquire apart, I desire companies in strong monetary well being. Whereas nobody really is aware of what’s across the nook and no dividend stream is assured, a historical past of persistently rising payouts with few (if any) interruptions are what I search for.

And there are many these within the UK market proper now!