LONDON, June 26, 2026, 16:04 BST
- BT shares hovered around 192p after the pension scheme was reported to have lost £300 million.
- The loss is minor compared to BT’s market value. Pension deficit payments are the larger cash outlay.
- BT’s new consensus has FY27 free cash flow after pension deficit payments falling below zero. That’s with a £2 billion normalised free cash flow target still in place.
BT Group plc (LON:BT.A) was steady late Friday, edging up 0.05% to 191.95 pence as of 16:04 BST. The shares moved between 190.55p and 193.65p in the session. BT was just under the £1.95 price set in this week’s executive share buys.
BT’s £300 million Thames Water hit isn’t the major takeaway for investors. With a £19.15 billion market cap on Google Finance, the write-off is just around 1.6% of the company’s equity value. BT shares remain about 21% under the 52-week peak of 242.09p. The real question is how much pension money remains tied up, rather than moving to shareholders as cash.
BT’s pension fund has taken a roughly £300 million hit after writing down its 8.7% holding in Thames Water, the Financial Times said. The move comes ahead of next week’s triennial valuation that will determine pension payments at BT for the next three years. Shan Abdullah, who manages pension risk for BT, told analysts the Thames Water position “has been written down” by “about £300m,” adding that BT sold its debt exposure before the writedown. Financial Times
BT’s cash drag is large, even if the write-off doesn’t move the needle much. For FY26, BT posted normalised free cash flow of £1.51 billion, with equity dividends of £807 million and pension deficit payments at £790 million. CEO Allison Kirkby repeated guidance for “cash flow inflection to c. £2.0bn in FY27.” But BT’s own normalised free cash flow metric excludes pension deficit payments, and the company says this measure doesn’t represent cash available to pay shareholders. Bt
BT’s 19 June consensus puts mean FY27 normalised free cash flow at £2.00 billion, basically matching its guidance. But the same consensus expects mean gross pension deficit payments of £784 million, leaving free cash flow after those payments at minus £52 million. That number stands out for a stock still pitched as a dividend recovery story.
BT is getting some recognition from the market for its recovery, though gains are limited. Kepler Cheuvreux began coverage this week with a Hold rating and set a price target at 213p, saying the stock’s valuation already reflects the expected near-term rebound. That target is roughly 11% higher than where shares closed on Friday.
BT’s latest director dealing notice doesn’t signal a management shift. CFO Simon Lowth saw 639,864 shares vest in the restricted share plan and sold 461,555 at £1.95, mainly for tax. Sabine Chalmers and Alison Wilcox also sold vested shares at £1.95.
BT’s next look at trading comes at the annual general meeting on July 9, with Q1 FY27 results following on July 23.
