Citi upgrades BT Group to 'buy'

"BT is facing headwinds to FCF generation that come from record levels of FttP (fibre-to-the-premises) investments (that will largely remain in place for the next three years), rising taxes and interest costs, as well as labour and energy," it said.

"These headwinds would normally render any telco unattractive and hence why the stock has been so weak in 2H22, reflecting these challenges."

However, Citi said "BT has some things that could move in its favour", as wholesale pricing moves higher, retail prices could see a significant move not just on the back book but also on the front book as ISP margins get squeezed.

At 1010 GMT, the shares were up 0.7% at 127.50p.