After a turbulent and troubled 2020 for BT Group (LSE: BT.A), shares in the former UK telecoms monopoly fared much better in 2021. Indeed, this popular and widely held share easily beat the wider FTSE 100 index last year. Here’s how the BT share price has performed since before the pandemic.
The BT share price crashed in 2019-20
At end-2019, the BT share price closed at 192.44p. Alas, 2019 was another poor year for the stock, having ended 2018 at 238.1p. Thus, the shares lost 45.66p — or 19.2% — in 2019. But the worst was to come. As coronavirus infections soared, global stock markets went into meltdown. At 2020’s rock-bottom, BT shares crashed to an intra-day low of just 94.68p on 3 August 2020, before bouncing back to close at 98.02p. However, as optimism rose on news of effective vaccines, the stock rebounded to end 2020 at 132.25p. Even so, this left the shares down 60.19p in 2020, a collapse of almost a third (-31.3%).
BT surged by over 28% in 2021
2021 proved to be a much better year for long-suffering BT shareholders. After early gains, the BT share price soon started to slide again, hitting its 2021 intra-day low of 120.45p on 9 February. But then the shares surged spectacularly, roaring ahead to hit their 2021 intra-day high of 206.7p on 23 June. However, they then fell back down almost as fast as they had raced upwards. On 26 October, they hit an intra-day low of 134.85p, before recovering to close at 143.25p. The shares then strengthened in late 2021, ending the year at 169.55p. Thus, this popular stock leapt by 28.2% last year, almost doubling the FTSE 100’s 14.3% gain (both excluding dividends).
What lifted BT shares in 2021?
I believe that the BT share price was driven by three key factors in 2021. First, after bottoming out in February, the shares came to the attention of value investors. Thus, strong buying pressure between early February to late June pushed the stock up by almost 86.25p from 2021’s low. However, having exceeded £2 in the summer, selling pressure drove the stock back down to October’s low. Then, as optimism returned later in 2021, the shares bounced back again.
The second factor supporting the BT share price in 2021 was stake-building in the group by a renowned telecoms investor. On 10 June, BT revealed that Altice, the Luxembourg-based French telecoms firm controlled by French-Moroccan billionaire Patrick Drahi, had built up a 12.1% stake in BT. Nominally, this stake was worth £2bn, but was largely amassed using equity derivatives and loans arranged with investment banks. Regardless of how it was attained, this holding made Altice BT’s biggest shareholder. It also explains the strong surge in BT shares in the preceding four months. Although Drahi has said he has no intention yet of making a bid for BT, he has since increased his stake to 18%. This takes his holding to 1.5 times that of BT’s second-largest shareholder, Deutsche Telekom (with a 12% stake).
Finally, the third factor driving the BT share price is the return of its cash dividend, following its May 2020 cancellation due to Covid-19. In addition, regulator Ofcom relaxed BT’s regulatory burden, plus the government introduced ‘super-tax breaks’ on BT’s capital investments in full-fibre broadband networks. All this added up to a positive year for BT stock.