Over the past decade, BT Group‘s (LSE: BT) been one of the FTSE 100’s worst performers. The share price slipped roughly 50% as legacy fixed-line revenues fell and heavy spending on fibre and pensions squeezed profits.

But in 2026, its long-awaited turnaround story is beginning to feel real.

The stock’s up about 22% this year as investors react to improved results and cost progress. On top of that, Bharti Enterprises, the Indian telecommunications conglomerate that already owns 24.95% of the company, has signalled confidence in the group.

So could this be the start of one of the UK’s most impressive recovery stories?

Strong results

BT published its FY2025 results on 21 May showing the following key improvements:

• Adjusted EBITDA came in at £8.23bn.
• Profit before tax rose 8% to £1.44bn.
• FY dividend increased 1.96% to 8.32p per share.

Management’s targets include EBITDA growth toward £8.31bn in 2028. Free cash flow that should strengthen as fibre roll-out is completed and capex should reduce once the major build phase ends.

Those are solid numbers, suggesting operating leverage is working — but they are not instant cures. How well it manages cost-cutting exercises could spell the difference between success and failure.

At present, it targets £3bn of cost savings, largely by moving customers to cheaper 5G and fibre broadband products. It has already achieved a reported £1.2bn of these savings.

Its broadband arm, Openreach, added 2.2m customers last year, boosting overall connected premises to about 8.8m. In total, it aims to reach 30m full-fibre premises by 2030, reducing capital demands and improving margins. 

Those moves could double free cash flow over time, but they’re heavily execution-dependent.

So is it good value at the current price?

Analysts using a discounted cash flow (DCF) model estimate the shares trade around 30% below fair value. Consensus forecasts imply earnings growth of roughly 11.86% a year going forward.

That should help drive further price recovery which, when combined with dividends, could deliver decent returns.

The dividend yield is only moderate at 3.7%, but management has signalled intent to grow it annually. It’s also sufficiently covered by earnings, making the stock relatively income-friendly for patient holders.

So could this be the bargain that turns into a big winner? It certainly looks promising — if the forecasts are accurate. But it isn’t risk free.

The largest single concern is the group’s debt of roughly £20bn, which leaves little room to navigate any surprise shocks. Plus, it limits dividend growth or the ability to invest in operations if markets tighten.

Final thoughts…

BT’s high debt means it’s far more exposed to challenges posed by regulatory changes, competition or execution setbacks on the fibre roll-out.

Still, I remain cautiously optimistic. The strong FY results and Bharti’s growing interest are meaningful endorsements, and cost and fibre progress give a believable road map back to strong cash generation.

With most costs now covered, a recovery is certainly on the cards. But impatient investors looking for short-term returns may be disappointed. This looks likely to be a drawn-out 10-20 year journey. So if you’re prepared to wait that long, then it’s worth considering.

For those targeting more rapid returns, I’ve recently covered several higher-growth stocks on the FTSE 100.

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Mark Hartley does not hold any positions in the companies mentioned.