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Altice, the telecommunications investor controlled by billionaire Patrick Drahi, has bought a 12.1% stake in BT worth £ 2bn, making it the largest shareholder in the British company.
The acquisition meant a return to contracting for the Luxembourg-based company, which had fallen in the last two years. reduce your debt. The investment in BT, made through a new British holding company separate from Altice’s main operations, represents Drahi’s boldest move since acquiring two US cable companies five years ago.
Altice said he had no intention of making an offer for the British telecommunications company, meaning that under the purchase code he could not make an unsolicited purchase offer for six months without the approval of the BT address and will not be offered a seat on the board.
The stake in BT meant a change of direction for Drahi, whose previous acquisition strategy has been to take control of undervalued telecommunications assets by increasing debt and then eliminating costs and selling assets. Their support for the existing management team and their long-term vision of the company’s role in fiber manufacturing, where the UK lags behind in other markets, is a new approach.
Deutsche Telekom remains a 12% shareholder in BT, which means that the British company considers the largest titular telecommunications group in Europe and the most aggressive distributor in the sector as its two largest shareholders.
Altice has been buying shares on the open market through banks, including a £ 810m trading operation, but only reported to BT management on Wednesday that it had become the telecom company’s largest shareholder .
The move raised questions about Drahi’s strategy to unlock long-term value, but people with direct knowledge of the situation said a takeover bid is unlikely to succeed. “A full takeover (of BT or Openreach) would likely go into political opposition given the strategic importance of the networks,” said Jefferies analyst Jerry Dellis.
BT’s share price has risen 90% since reaching 11-year lows last summer, including a 5% jump last week. It gained 1% to £ 1.87 after Altice’s stake was revealed on Thursday.
The recent stock price recovery has been driven by a number of positive developments for BT, including the decision of regulator Ofcom relieve the regulatory load about companies investing in fiber upgrades and the government’s decision to introduce tax rebates on capital investment that have strengthened the company’s hand.
Drahi, owner of the auction house Sotheby’s, said it believed BT was the best position to take advantage of the huge investment in upgrading Britain’s full-fiber broadband networks, a position that was not reflected in its share price.
“BT has a major opportunity to upgrade and expand its full fiber broadband network to bring substantial benefits to millions of homes across the UK,” Drahi said. “We fully support management’s strategy to achieve this opportunity.”
BT CEO Philip Jansen has argued that the company needs long-term investors as it embarks on a costly network upgrade. Since joining Worldpay in 2019, the private equity-backed payments business, telecommunications has held talks with infrastructure and sovereign wealth funds about its £ 15bn network upgrade plan. bring a financing partner to put more fiber in rural areas.
Jansen said: “Investing in this scale from a respected industry leader is a big vote of confidence in BT’s bold plans to be the UK market leader in next-generation digital connectivity. I have already spoken to Patrick to welcome him and I look forward to an ongoing engagement and debate. “
Altice’s reversal also comes when BT is looking for a chair to replace Jan du Plessis due to go down in the summer, after a tailcoat in the boardroom.
Altice withdrew his shares in Amsterdam last year, after arguing they were undervalued. This was part of efforts to strengthen its empire, which covers France, Portugal, Israel, the United States and the Dominican Republic, following a series of cost-cutting moves and asset disposals in recent years. He also divided his American business into an independent company. The BT movement followed a the $ 7.8 billion attempt has failed bought Canadian cable company Cogeco last year.
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