LONDON, UK - JUNE 20TH 2015: The homepage of the official BT (British Telecom) webiste, on 20th June 2015.
The BT share price (LON: BT.A) is down by a percentage point in today’s trading session, reversing a strong bullish trend that had resulted in its value surging by over 15 percent in the first few trading sessions of the year. The current price surge comes amidst reports that the company’s Phone bills had jumped by around 14 percent as the rate of inflation in the UK continued to affect everyday users.
The decision to hike the bills has come under scrutiny by the opposition Labour Party, which called for stronger consumer protections and mandatory industry-wide low tariffs for low-income families. The price hike is also expected to be 3.9 percent above the current UK’s inflation rate of 10 percent, further generating political backlash for BT, with some people viewing it as taking advantage of its company.
However, despite the decision having bad optics, investors are likely to benefit from the hikes, and we might see BT share price continuing to rise. According to CEOs of telecoms across the UK, the decision to hike the phone bills will see companies, such as BT, being well-positioned to address the current rising costs such as energy and labour. From the investors’ side of view, these hikes will also help the company meets its bottom line, which is positive for shareholders.
As seen from the above analysis, the recent decisions by the company, including hiking its phone bills, are likely to help it continue rising in the markets. On the technical side of things, I expect to see the current bullish trend of the company continuing for the next few trading sessions.
There is a high likelihood that we might see its value rising above the 130p price level and possibly hitting and breaking the 134 supply level. However, a drop below the 120p price level will invalidate my bullish analysis.