I actually thought the final set of full-year outcomes would have given the BT Group (LSE: BT.A) share price a lift, after the telecoms big informed us it had reached a key milestone.

It did for a short spell, however the shares flattened once more. Then the price dipped after this yr’s H1 outcomes on 7 November. The lacklustre response comes regardless of BT having soothed my nerves on my key dividend fear.

What has to occur for the BT share price to begin climbing once more?

Previous peak prices

I must remind myself what the FY outcomes fuss was all about:

Having handed peak capex on our full fibre broadband rollout and achieved our £3 billion value and repair transformation programme a yr forward of schedule, we’ve now reached the inflection level on our long-term technique — CEO Allison Kirkby, Could 2024

I noticed the capital expenditure wanted for broadband rollout as risking potential hits for 2 essential components: BT’s debt mountain and the prospects for its dividend.

Dividend outlook

The dividend‘s forecast at 5.2% this year, rising to 5.3% by 2027. That’s not an enormous yield, but it surely has one key factor in its favour. Forecast earnings ought to cowl it, 1.7 instances within the 2024-25 yr, and up to 2.0 instances going by 2027 forecasts.

BT hasn’t needed to do what I’ve feared probably the most, specifically reducing its dividend, the best way rival Vodafone did with a 50% lower. This yr’s progress has boosted my confidence in BT’s long-term dividend prospects. However how do debt forecasts look?

Debt rising

With H1 outcomes, I didn’t like what I noticed. Web debt was up to £20.3bn, regardless of these value financial savings and the slowing of capital expenditure. The board stated it was primarily as a consequence of £0.8bn scheduled pension scheme contributions, which might do it.

Forecasts put the determine at £19.9bn by March 2025, and up at £20.2bn by 2027. Will passing this “inflection point” ever have any impact on debt?

Outlook

On the interim stage, BT spoke of “income progress and EBITDA progress forward of income, enhanced by value transformation from FY26 to FY30“. That, it appears, ought to feed via to “normalised free money movement of circa £2bn in FY27 and circa £3bn by the tip of the last decade“.

Forecasts mirror that, placing 2027 free money movement at £1.96bn. I simply marvel why no one seems to anticipate any of it for use to make a severe try at getting BT’s debt down.

The share price

There’s a consensus goal of 202p for the BT share price proper now. It suggests a wholesome 29% rise from in the present day to get there. To know whether or not that’s going to be sensible, I feel we’d have to attend for the following FY outcomes. They’re not due till Could 2025, however a Q3 replace in January would possibly give us a clue.

I’m more and more drawn to BT as a dividend inventory. However I actually need to see that inflection level turning into onerous money first.