The recent volatility in BT Group’s shares, including a 10% decline over the last month, has drawn renewed attention to the telecom provider’s corporate debt. BT’s bonds not only offer attractive yields but also compare favourably with those of its European and US peers.
The UK’s largest provider of landline, mobile and internet services is a steady ship in terms of earnings and maintains a disciplined approach to borrowing. BT Group operates under the BT, EE and Plusnet brands, while its Openreach division manages much of the UK’s broadband network.
When reporting its full-year results earlier this year, BT Group highlighted its cost reduction programme, which resulted in savings of more than £900 million. This initiative helped the company clock a 23% increase in net income, despite a roughly 2% decline in revenue. For the full year ending in March 2025, BT Group posted revenue of £20.35 bn while net profit jumped to £1.05bn.
More recently, BT Group set out ambitious plans to provide 99% of the UK population with standalone 5G by the end of 2030, four years ahead of other domestic operators. Work has already begun: EE, BT’s mobile arm, became the first European operator to activate Ericsson’s AIR 3284 radios, which feature built-in antennas designed to maximise network performance and provide up to four times more uplink capacity. Two live sites are already operational in Leeds, with hundreds more planned by 2030. Once completed, the upgraded network will offer 100 times more capacity than current 4G services and will be better able to handle dense use in busy areas and at major events.
- Wagamama’s bonds prove as popular as their noodles
- Asda bonds: how to have your cake and eat it this summer
- Podcast: Introduction to corporate bonds with WiseAlpha
Disciplined borrowing strategy
BT funds its operations through a mix of bond issuance, commercial paper, committed borrowing facilities and investments. Its debt maturities are deliberately staggered to meet short-, medium- and long-term requirements. Outstanding maturities include bonds due over each of the next five years as well as longer-dated bond issues stretching out to 2047 and even 2083.
The company taps markets and currencies with strong investor demand, including outside of the UK. BT said previously that, when market conditions allow, it will aim to pre-fund some upcoming maturities by buying back bonds ahead of schedule, but this was focused mostly on shorter-dated maturities.
Comparison with other European telecoms
BT Group’s subordinated hybrid bond maturing in December 2083 carries an 8.375% coupon. In the secondary market, it currently yields around 7.72%, with yield-to-maturity of 7.573%. For comparison, the closest government bond – the 50-year gilt – has a 4.909% coupon, leaving a yield spread of 266 basis points, the widest among major telecom peers.
Vodafone’s 2080 perpetual bond, which carries the same rating, yields 2.625% and trades at 180 basis points over 30-year German bunds. Deutsche Telekom’s bonds trade at 120 basis points over 10-year bunds. Orange’s most recent issuance – a EUR750 million 10-year bond with a 3.5% coupon – was priced just three basis points above French government OATs of the same maturity.
BT’s long-term debt is rated BBB by Standard & Poor’s and Fitch, and Baa2 by Moody’s, placing it in line with other large European telecom issuers.
BT’s debt profile combines relatively high yields and wide spreads compared with peers, and a much more predictable income stream compared with its equities.
