(Bloomberg) -- BT Group Plc’s most profitable business is likely to see a drop in revenue that could drag shares of the British telecommunications operator lower by about a quarter, Citigroup Inc. warned.

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Revenue at BT’s Openreach network division may start to drop in 2025 and 2026, with the trend persisting for the rest of the decade, analyst Carl Murdock-Smith said Tuesday in a note to clients. Murdock assumed coverage of the stock with the report, rating BT a sell versus Citi’s previous recommendation of buy.

“Given consensus estimates imply ongoing growth, we see risk of a turn in sentiment,” Murdock-Smith said, cutting Citi’s target for the stock to 112 pence from 200 pence. The new objective implies a 26% drop from Monday’s close.

BT shares slid 4.3% to 145.00 pence at 12:50 p.m. in London after falling as much as 6.5%, the biggest intraday decline since November. The trading volume was more than six times the average for the past 20 days.

A rapid loss of broadband customers has been a key concern for BT investors in recent years. The company lost more than 200,000 lines in the quarter that ended in December on competition from smaller fiber upstarts. A continued decline in the broadband client base will more than offset gains from inflation-linked price increases, according to Murdock-Smith.

Openreach was BT’s most profitable unit in fiscal 2024, contributing less than 30% of revenue but accounting for almost half of earnings before interest, taxes, depreciation and amortization.

Murdock-Smith previously worked as a telecom analyst at Berenberg, where he rated BT as buy between March and October last year. He was appointed as head of European telecoms equity research at Citigroup in November, according to his LinkedIn profile. Before Berenberg, he worked in investor relations at BT.

--With assistance from Kwaku Gyasi.

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