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Drahi boosts stake in BT to 24.5%, will not make an offer
Global Banking & Finance Review®
Company
By Sarah Young
LONDON (Reuters) -Billionaire Patrick Drahi has increased his stake in BT to 24.5% but reiterated that he does not plan a full takeover for Britain’s biggest telecoms group.
The Franco-Israeli entrepreneur has since 2021 been adding to a position in Britain’s 175-year-old former monopoly BT, betting that its $20 billion investment in a new national fibre network will succeed in the long-term.
The network BT is building is viewed as critical national infrastructure by the British government, and it has in the past warned it would intervene to protect the roll-out of that network by the telecoms group if needed.
Drahi’s Altice UK unit on Tuesday lifted its stake to 24.5% from 18%, days after BT’s results showed the pressure its investment in the new fibre network was putting on its free cashflow. Shares in the group lost as much as 10% on Thursday, but have since recovered.
At Monday’s closing price, Drahi’s purchase of BT shares would have cost 961 million pounds.
Enders analyst James Barford said Drahi’s share purchase showed the telecoms investor’s confidence that BT would in future reap the benefits of the fibre build which is expected to more than double future cash flow.
“That’s possibly the opportunity that he’s seen here, in that if he believes that they can deliver on that, and that it’s a strong path,” Barford said.
Shares in BT rose 0.5% to 148 pence in early trading. The stock has struggled this decade, and is way off highs of 500 pence seen in 2015.
Investors will hope for an improvement as the completion of the new fibre network nears in 2030. BT said last week it would cut up to 55,000 jobs in future as it will not need all the contractors and engineers currently building the infrastructure.
Drahi’s statement said Altice did not intend to make an offer for BT, meaning it cannot do so for six months under UK takeover rules, unless circumstances change.
A change of circumstance includes the emergence of a counter offer for BT, or if BT’s board agrees to a deal.
Drahi’s Altice group controls SFR, France’s second-biggest telecoms company, and he also has assets in the United States, Portugal and Israel.
Britain last year investigated Drahi’s investment in BT but found there was no national security risk.
Analysts have in the past speculated Drahi could push BT, which has a market capitalisation of about 15 billion pounds ($18.93 billion), to separate its networks arm Openreach to achieve a higher valuation shorn of the risks related to BT’s enterprise and consumer units.
Deutsche Telekom is BT’s second-biggest shareholder with a 12% stake, according to Refinitiv data.
($1 = 0.7923 pounds)
(Reporting by Sarah Young; editing by Kate Holton and Bernadette Baum)
A full takeover occurs when one company acquires a controlling interest in another company, typically by purchasing a majority of its shares. This often leads to the acquiring company gaining complete control over the target company's operations.
Free cash flow is the cash generated by a company after accounting for capital expenditures. It is an important measure as it indicates the cash available for distribution to shareholders, debt repayment, or reinvestment.
A stake in a company refers to the ownership interest held by an individual or entity, typically represented as a percentage of the total shares. It indicates the level of control and financial interest in the company's performance.
Critical national infrastructure includes essential services and facilities that are vital for the functioning of a society and economy, such as telecommunications, transportation, and energy systems. Their protection is crucial for national security.
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