BT (LSE:BT.A) shares remain one of the most popular investments in British portfolios. There’s no denying that the telecommunications firm plays a vital role in the UK’s connectivity and infrastructure. But crushing debts have made it a fairly poor performer in recent years. In fact, since December 2014 – 10 years’ ago – the market-cap’s shrunk by over 60%.

So it may come as a surprise that since January 2023, the stock’s actually performing rather well. In fact, it’s up almost 40%. And investors who bought £5,000 worth of shares now have around £6,840.

What happened? And is now the time to consider adding this business to my portfolio?

Profits are on the march

Under the new leadership of Allison Kirkby, BT’s bottom line’s finally started moving back in the right direction. The firm’s been investing a lot of money into building out fibre optic and 5G infrastructure. This caused capital expenditures to surge rapidly. But earlier this year, these costs reached their peak. And thanks to steadily rising efficiency, infrastructure expenses have started to fall.

At the same time, management’s successfully delivered £3bn in annualised savings, with a further £3bn expected to be unlocked before the end of 2029. As a result, while net earnings per share still fell by 9% in the first half of its current fiscal year, net operating cash inflows surged 29% to just over £3bn.

Kirkby’s highlighted that the underperforming divisions are largely outside the UK and are in the process of refocusing the business on its core market. And there are already reports circulating that the company’s seeking to sell off its international ops.

If this proves accurate, the proceeds would likely to go towards reducing leverage and its pension deficit. Depending on the amount of capital raised, this could significantly improve the health of BT’s balance sheet. And it might explain why some analysts are predicting the stock could climb as high as 290p per share – almost 90% higher than current levels.

Taking a step back

Share price forecasts should always be taken with a pinch of salt, especially when they suggest a near-doubling valuation within the next 12 months. However, it’s worth pointing out that at a forward price-to-earnings ratio of 8.9, the stock looks pretty cheap.

So is this a screaming buying opportunity for me and other investors? That depends on my/their portfolio goals. While margins have begun moving in the right direction, revenue growth remains elusive. The firm’s 5G and fibre optic customer count’s rising at a rapid pace.

However, most of these are pre-existing customers switching from older technology, translating into near-zero growth. In other words, BT’s new products and services are just cannibalising old ones. That’s hardly a surprise, given the superiority of the technology. However, it goes to show that BT isn’t able to consistently charge a premium for these better services due to intense competition.

As such, an investment into BT might be more suitable for investors seeking a dividend income. After all, management’s committed to increasing shareholder payouts. And improvements to profitability certainly provide the flexibility to keep this promise.

But at a 5.2% dividend yield, I think there are far less risky and more lucrative passive income opportunities elsewhere, at least for my own portfolio.