Altice, the telecom investor controlled by billionaire Patrick Drahe, has bought a 12.1 per cent stake in BT for £2 billion, making it the largest shareholder in the British company.
The acquisition marks a return to dealmaking for the Luxembourg-based company, which over the past two years has fallen back to reduce her debt. The investment in BT, made through a new British holding company separate from Altice’s main operations, marks the boldest move Drahi has made since he acquired two US cable companies five years ago.
Altice has said it has no intention of making an offer to BT, which means that under the takeover law it cannot make an unsolicited takeover offer for six months without BT management approval, and will not be given a seat on the board. .
Building the stake in BT marked a turnaround for Drahi, whose previous takeover strategy was to take control of undervalued telecom assets by raising debt and then divest costs and sell the assets. His support for the current management team and his long-term view of the company’s role in the fiber industry, where the UK lags behind other markets, is a fresh approach.
Deutsche Telekom remains a 12 percent shareholder in BT, meaning the British company is the largest existing telecom group in Europe and the sector’s largest deal maker as its largest shareholder.
Altice had been buying shares on the open market through banks including a £810m deal but only told 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 first-hand knowledge of the situation said the takeover bid was unlikely to succeed. “A full takeover (of BT or Openreach) is likely to face political opposition given the strategic importance of the networks,” said Jerry Dellis, an analyst at Jefferies.
BT’s share price is up 90 per cent since hitting an 11-year low last summer, including a 5 per cent rally last week. It rose 1 per cent to £1.87 after the Altice stake was revealed on Thursday.
The recent rally in stock prices was driven by a series of positive events for BT, including Ofcom’s orchestrated move to Reducing the organizational burden On companies investing in fiber upgrades and the government’s decision to offer tax breaks on capital investment that strengthened the company’s hand.
Drahi, owner of the auction house Sotheby’s, said he believed BT was best suited to cash in on the huge investment in upgrading Britain’s broadband networks to full fibre, a position that was not reflected in its share price.
“BT has a huge opportunity to upgrade and expand its full fiber broadband network to bring significant benefits to millions of households across the UK,” Drahi said. “We fully support the management’s strategy to realize this opportunity.”
BT CEO Philip Janssen has argued that the company needs long-term investors as it embarks on an expensive network upgrade. Since joining from Worldpay in 2019, the private equity-backed payments company, the telecoms have been in talks with sovereign wealth funds and infrastructure over its £15 billion network upgrade plan and taken into account. Bring in a financing partner To put more fiber in rural areas.
Jansen said: “Investing on this scale from a respected industry leader is a huge vote of confidence in BT’s bold plans to be the UK market leader in next-generation digital connectivity. I have already spoken with Patrick to welcome him and look forward to sharing and discussing continuous”.
The Altice investment also comes as BT looks for a chair to replace Jan du Plessis, who is due to stepping down In the summer after a conference room quarrel.
Altis write off its shares In Amsterdam last year, after they argued that they were undervalued. It was part of efforts to strengthen its sprawling empire – spanning France, Portugal, Israel, the United States and the Dominican Republic – after a series of cost-cutting moves and asset disposals in recent years. It also split its US business into a separate company. BT movement followed a $7.8bn bid failed to buy Canadian cable company Cogeco last year.