Boost for BT shares after French telecoms group Altice buys £2.2bn stake
Altice, the telecoms group controlled by the billionaire Patrick Drahi, has become BT’s biggest shareholder after spending £2.2bn to take a 12.1% stake, citing the opportunity presented by the national rollout of next generation broadband.
Drahi, who founded Altice in 2001 and still serves as its chairman, said the investment was a sign of confidence in BT, given the UK government’s plan to expand next-generation full-fibre and gigabit-speed broadband across the country. It means just under a quarter of the shares in the UK’s largest telecoms group are now held by French and German operators.
Larger than the scale typically considered to be a passive interest, the share grab puts Altice, France’s second largest telecoms group, just ahead of Deutsche Telekom, which holds a 12.06% shareholding and has a seat on the board.
“The stake buys us a seat at the table,” said a source close to Altice. “It starts the conversation over what we might do together.”
Altice said it had informed the board of BT that building the stake was not part of a wider takeover plot. Nevertheless, the potential future ramifications of Drahi’s move delighted investors, who sent BT’s shares up more than 3%, making it the second biggest riser among FTSE 100 companies, to an 18-month high.
The pledge not to make an offer now prevents Altice from bidding for at least six months under UK takeover rules. However, Altice can make a bid
for BT if it is agreed with the board, or another company were to make an offer.
BT’s Openreach subsidiary, which builds and runs the UK’s broadband network, is expected to benefit from Boris Johnson’s election promise to extend next-generation broadband speeds to all homes in the UK.
Altice’s move follows BT’s commitment to invest £12bn in getting full-fibre broadband connections to 20m homes by 2026, after the telecoms regulator Ofcom announced a host of financial incentives to help operators recoup their significant rollout costs over the coming decade.
Last month, BT said it would extend its goal to 25m premises by considering a joint venture with a partner at a cost of about another £3bn.
Drahi informed the BT chief executive, Philip Jansen, and the outgoing chairman, Jan du Plessis, of his multibillion-pound stake-building move on Wednesday night. He said he was not seeking to overhaul management or the strategic direction the company was pursuing.
“BT has a significant opportunity to upgrade and extend its fullfibre broadband network to bring substantial benefits to millions of households across the UK,” Drahi said. “We fully support the management’s strategy to deliver on this opportunity. We understand that the expansion of the broadband network is one of the UK government’s most important policy objectives and a core part of its levelling-up agenda.”
Altice, which has more than 40 million customers, has built the stake through Altice UK, which is wholly owned by Drahi and was created solely to house the company’s stake in BT.
BT said it welcomed “all investors who recognise the long-term value of our business and the important role it plays in the UK. We are making good progress in delivering our strategy and plan.”
Jansen has long maintained that BT’s shares are undervalued and has pushed to restructure the company in an attempt to return it to “national champion” status.
The company is cutting 13,000 jobs, moving out of the London headquarters that have been its home since 1874, and closing 270 of the 300 sites it operates across the UK by 2023.
Last year, Drahi moved to delist Altice’s shares from the stock market in Amsterdam, taking the €6.4bn (£5.5bn) company private, arguing that they were undervalued.