BT's (LSE: BT.A)latest results released last week show a business that is in rude health. The company's strategy of investing in fibre-optic broadband and football rights looks like it is paying off.
Sales in BT's consumer division have been reinvigorated and the company is generating plenty of surplus cash, which allowed the dividend to be hiked by 15%.
Despite this, it seems that support for the shares is waning. That reflects concerns that the growth in broadband customers is slowing down and fears that BT might start paying silly money in the forthcoming Premier League rights auction.
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Then there's the big pension fund deficit of nearly £6bn, which might need a chunk of cash to get it under control.
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These are legitimate worries, but BT looks as if can cope with them. There are still opportunities to switch existing customers to pricier fibre broadband. Its TV service may get better with the addition of Netflix, potentially tempting people to switch over from the likes of Virgin and Sky.
As far as football is concerned, it's by no means certain that BT will blow a load of cash on aggressive bidding to take more rights from BSkyB.
Meanwhile, the firm's debt is more than £1bn lower than it was a year ago. And the strength of its cash flow gives it scope to invest, top up its pension fund and still grow the dividend.
Verdict: buy
