This morning saw the release of half-year results for BT Group (LSE:BT.A). BT shares have spiked 5% on the news, trading just under 150p as we write. Based on the impressive cost savings, dividend resumption and rollout of the full fibre network, we think there is further upside in coming months for the stock. Here’s why.

Cost savings ahead of plan

The first kick higher in BT shares actually came at the start of the week. Before full results came out, the company decided to release a short statement around the cost saving target it has. This was due to speculation late last week that the company was ahead of target with the cost savings. In the statement, it said that “BT confirms that it has delivered on its £1bn of gross annualized cost savings 18 months ahead of the March 2023 target.”

This saw the BT share price jump and was a positive sign heading into results this morning. The full results mentioned that the transformation that the business is carrying out is heavily focused on cutting costs. More good news for the coming years was outlined. It said that the business has “brought forward FY25 target of £2bn gross annualized savings to FY24 with further savings in FY25, within the expected cost of £1.3bn; Group peak capex from FY23 now expected to be £4.8bn, down from £5bn previously”.

Such confidence in future savings shows a business that is in control of its finances. Further, it must be confident in this regard to make statements looking out to the full-year 2025.

Progress with network rollout

Another point that leads us to believe there is further upside for BT shares is due to the rollout of full fibre network. Full fibre broadband has already been completed to almost 6m premises. This is expected to jump to 25m by 2026. Growth was also seen in the 5G space. It noted that the “5G network now covers over 40% of the UK’s population and we have over 5.2m 5G ready customers”.

We think this momentum is positive, with the infrastructure being put in place now that should yield dividends into the future. Network providers will be able to utilize this via Openreach, with BT having the platform to generate good revenue in the future.

Debt pile still a concern

We do stress some caution though when looking to buy shares in BT. The company has struggled for many years, with the share price down61% over the past five years. It also has a large debt pile of £18.2bn. This debt actually rose by £614m in the past six months! The interest costs on servicing this kind of debt is high, and will only get worse if action isn’t taken to reduce it.

On balance though, the positives outweigh the negative when looking at this as an investment. Therefore, we’d look to buy shares following the results today.

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