BT Group (LON: BT.A) share price has remained in a consolidation phase this year as investors wait for the new CEO who will take over in February. The stock has also wavered amid concerns about the company’s future growth and profitability. It was trading at 121p on Wednesday, lower than last month’s high of 136.20. It has retreated by over 33% from its 2021 highs and by 65%.

BT Group, like other telecommunication companies like Vodafone and Virgin Media, are going through challenges. Growth has slowed while infrastructure costs have remained higher as inflation remains a major issue. 

These companies have also faced challenges in this high-interest environment. BT is quite exposed to high-interest rates because of its substantial debt load. Data compiled by WSJ shows that its interest expense rose by 16.4% in the last financial year to £886 million. BT has a net debt of almost £19 billion.

BT Group also has other challenges such as its substantial pension deficit. In its most recent results, it said that it had a pension funding deficit of £3.7 billion. While this is an improvement from its 2020 high, it is part of the challenge that Allison Kirkby will have to deal with.

BT Group is also spending heavily to boost its Openreach program. This is a service that provides fibre optic to most people in the UK. While Openreach’s Capex has peaked, the company will need to keep spending as it seeks to reach over 25 million customers by 2025. 

The other challenge is its business unit, which has gone through challenges in the past few months. Its sales have continued to retreat as customer growth fades and as competition from other providers rise. 

Additionally, as I have written before, Patrick Drahi, the French billionaire who has accumulated a huge stake in BT is going through a financial crisis. To solve it, he has been forced to dispose some of its assets. While he has not sold his stake in BT, he could if his liquidity crunch continues.

Looking at the most recent financial results, we see that BT Group’s revenue for the first half of the year remained flat at £10.4 billion. Its profit before tax rose to £1.07 billion while the PBT fell to £844 million. BT’s profitability could improve as it implements cost-cutting programs, including job cuts. 

BT Group faces challenges ahead and its stock price lacks a clear catalyst ahead. One catalyst that could push the stock higher is the upcoming CEO and her initiatives. For example, we have seen the Rolls-Royce share price surge after a new CEO came in. However, I am not hopeful considering her performance at Telia, the Swedish giant where she was the head. Telia stock has retreated by over 40% in the past 10 years.

BT chart by TradingView

In my last articles, I have explained why I remain pessimistic about BT stock because it lacks a clear catalyst. On the weekly chart, we see that the shares have remained under pressure in the past few months. It is consolidating at the 50-week and 25-week Exponential Moving Averages (EMA).

The stock has formed a symmetrical triangle pattern, which is a bearish sign. Also, the Average True Range (ATR) has continued slipping, signaling that volatility has dropped. Therefore, the outlook for the stock is neutral with a bearish bias, with the next target being at 100p.

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