Here’s why Vodafone and BT Group shares are in the spotlight

Vodafone (LON: VOD) and BT Group (LON: BT.A) shares have remained in a tight range in the past few weeks as investors focus on their upcoming earnings and their internal actions. BT Group stock was trading at 140p on Wednesday, inside the range where it has been since June 25th. It has risen by over 36% from its lowest point in April.

Vodafone share price, on the other hand, was trading at 70p, down by 6% from its highest point this year and up by 13% from the YTD low.

Slow growth but turnaround working

Telecom companies like Vodafone and BT Group have come under pressure in the past few years as growth in their industry has slowed.

Data compiled by SeekingAlpha shows that Vodafone’s annual revenue has moved from over $49.5 billion in 2019 to $39.6 billion in the last financial year. In the same period, BT Group’s revenues dropped from $28 billion to $26 billion.

These companies have also had to spend billions of dollars upgrading their networks to 5G and the process will continue as the world starts moving to 6G. China has become the first country to start implementing 6G upgrades and other countries will catch up in the next few years.

Therefore, the two companies have embarked on different strategies to attract investors. BT Group has focused on cost cuts, especially in the labour side. The company announced that it would cut up to 55,000 jobs by 2030, a move it hopes will save it billions.

Vodafone has taken a more comprehensive approach. It has scaled down its global ambitions in a bid to become a leaner entity. A few years ago, it spun out its towers business into a publicly traded company known as Vantage Towers.

Earlier this week, the company said that it sold a further 10% of its stake in the company, taking in 1.3 billion euros. It will use these funds to further lower its mountain of debt. In the past two years, the company has sold a stake worth 2.2 billion euros.

Vodafone has also taken more actions to simplify its business. It has sold its Spanish business to Zegona in a 4.1 billion euro deal. It also sold its Italian business to Swisscom for 8 billion euros.

Vodafone is also working to solidify its market share in its key countries. For example, it is in the process of merging its UK business with Three, a move that will boost its market share as it competes with BT’s EE.

The next important catalyst for the Vodafone share price will be its first quarter earnings scheduled for Thursday. These numbers will provide more color about its debt and its performance in Germany, its biggest market.

BT Group will also publish its trading statement on Thursday 25th. The consensus is that its group revenue dropped slightly in the first quarter to £5.13 billion while its EBITDA moved to £2 billion. BT’s biggest challenge is its business segment whose revenue is expected to come in at £1.97 billion. For the year, analysts expect that BT’s revenue will be £20.9 billion while its EBITDA will be £8.2 billion.

Vodafone share price analysis

Vodafone chart by TradingView

The four-hour chart shows that the VOD stock price has been in a tight range in the past few weeks. In this period, it has dropped from the year-to-date high of 74.86p in May to the current 70p.

It is consolidating at the 50-period and 100-period exponential moving averages (EMA). Most importantly, the stock has formed a symmetrical triangle chart pattern, which I have shown in gren. This triangle came after the stock jumped from a low of 59.58p, meaning that it is a bullish flag.

Therefore, the stock will likely have a bullish breakout in the coming weeks. If this happens, it will likely rise as buyers target the year-to-date high of 74.86. This view will be confirmed if the company publishes strong financial results. Remember, Vodafone is one of the best stocks for income investors because of its 10.78% dividend yield.

BT share price analysis

BT chart by TradingView

Meanwhile, the BT Group stock price has also consolidated in the past few weeks. It has remained at 140p, where it has been stuck for a while. This price is a few points below the year-to-date high of 145.95p.

Like Vodafone, the stock has also formed a bullish flag or pennant pattern that is nearing its confluence levels. It has remained above the 100-period EMA. The stock sits higher than the crucial support level at 135.95, its highest level in May this year and in December. Therefore, the stock will likely have a bullish breakout after publishing its financial results. If this happens, it will likely retest the key resistance at 145.95p.

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