Here’s my verdict on the current BT share price

This Fool dissects the current BT share price and decides if he would buy or avoid the shares for his portfolio.

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BT (LSE:BT.A) shares have experienced a roller-coaster ride so far this year. At current levels, the BT share price looks tempting, so should I add the shares to my holdings? 

BT share price roller coaster

The BT share price is currently trading for 166p. At this time last year, shares were trading for 137p, which means the shares are up 21% over a 12-month period. The past six months has seen the shares dip by 19% from 205p in early June. At current levels, BT shares are trading at similar levels prior to the market crash but overall the shares have been on a downward trajectory for a number of years.

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I believe the BT share price has been on a downward trajectory in recent years due to poor performance related to restructures, as well as increased competition among other things — but more on that later. At current levels, BT shares sport a price-to-earnings ratio of 17, which could be considered a bargain for a company so crucial to the UK’s communications network.

For and against investing

FOR: BT is currently undergoing a major restructure which will see it return to focus on its core business model. This will involve investing and focusing on its telecom networks and fibre internet connectivity for example. A positive to come from the restructure was the recent addition of Adam Crozier as an independent non-executive director and chairman. He has a history of turning around ailing firms, ITV being a recent example.

AGAINST: BT has tried to restructure and re-focus in the past. Approximately five years ago it decided to try new markets and products which led to the entry into the TV market. An example of this not working so well is its BT Sport model which saw it engrossed in a bidding war for many of sports top attractions. It could be argued it overpaid for some of these TV rights. BT has been in discussions with streaming company DAZN to sell its BT Sports arm. Things haven’t worked out in the past so I must be wary of BT repeating the same mistakes.

FOR: A half-year trading report announced last month showed signs of longer-term recovery. Revenue was slightly down but profit was up. Operationally, BT confirmed it continues to cut costs to save £1bn as part of its streamlining and restructuring. This target has been met 18 months early. Crucially, an interim dividend of 2.31p was declared. This is good news for investors as last year it had to cancel dividends.

AGAINST: The broadband and fibre connectivity market is more saturated and competitive than ever. BT faces a fight on its hands to return to being one of the most trusted telecoms providers in the UK. To make things worse, it has a lot of debt on its books which could hinder progress and performance.

My verdict

I can see the longer term potential in BT’s new direction and refocus on its core business model. The BT share price at current levels is tempting but there are too many negative factors putting me off. Yet another restructure and lots of debt worry me. Right now I will avoid BT shares for my portfolio.

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Jabran Khan has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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