Image source: BT Group plc
BT’s (LSE: BT.A) share price looks increasingly disconnected from its medium‑term earnings growth outlook, in my view.
The market is still trading on the short‑term optics of heavy fibre capex, regulatory noise and muted consumer demand. Yet the long‑term cash‑generation story is strengthening.
As the fibre build peaks, capex intensity falls and Openreach’s footprint expands, BT’s earnings profile should improve materially. And I believe this will power its share price much higher.
So, how high can it go?
Earnings growth potential
The consensus forecast of analysts is that BT’s earnings (‘profits’) will grow by an annual average of 14% to end-2028 at minimum. A risk here is that the intense competition in the sector could squeeze its margins over time.
However, one key structural force that should support that growth outlook is that BT is moving beyond the most capital-hungry stage of its fibre investment cycle. Openreach already passes more than 21m premises, according to its Q3 2025 results released on 5 February 2026. And it is on course for 25m by year‑end. As capex intensity eases, a greater share of incremental revenue can convert into profit and cash flow.
At the same time, momentum in full‑fibre adoption is building. Openreach’s average revenue per user (ARPU) continues to rise. As fibre steadily replaces legacy copper, BT benefits from a structurally higher‑margin product mix — a direct tailwind for earnings.
And BT’s mobile arm remains a quiet strength. EE is still the UK’s top-rated network, and 5G+ standalone coverage has already reached two-thirds of the country. The long‑term goal remains 99% by 2030, and this will underpin ARPU, reduce churn and support profitability.
In its Q3 2025 results,, BT reiterated that it expects to achieve its full-year financial guidance. This includes cash flow to reach around £2bn next year, and around £3bn by the end of the decade.
How high could they go?
To pinpoint BT’s value, I ran a discounted cash‑flow (DCF) analysis. This identifies where any stock should be trading, based on projected cash flow forecasts for the underlying business. These, in turn, reflect the consensus forecast of analysts for the company’s earnings growth in the years ahead.
These cash flows are then discounted back to today, using a rate that reflects the risk of owning the shares. Other analysts’ DCF models may use different inputs, of course, which could produce lower valuations.
However, my modelling — including a discount rate of 9.1% — suggests BT shares are 49% undervalued at their current £2.06 price. Therefore, its fair value could secretly be close to £4.04 a share — nearly double where the stock trades today.
And because asset prices can trade towards their fair value over time, it suggests a potentially superb buying opportunity to consider today if those DCF assumptions hold.
My investment view
I believe BT’s valuation still looks far too low relative to its improving medium‑ and long-term earnings growth profile.
When the market finally begins to properly price in that trajectory, I think the share price will soar.
Consequently, I will be buying more of the shares very soon and think them worthy of other investors’ attention.
