Patrick Drahi's telecoms investment group Altice has increased its stake in BT to 18 per cent but said it was not currently planning to take control of the former UK telecoms monopoly.
The company has been on alert since takeover restrictions on Altice, which built a 12 per cent stake in June, were lifted last week. Drahi said on Tuesday that he had “engaged constructively with the board and management of BT” and that he did not intend to make a bid.
BT was told of Altice’s latest move on Monday after markets closed when Mr Drahi contacted BT chair Adam Crozier to inform him that it now had 18 per cent of the voting rights.
The UK government has since fired a shot across Altice’s bows. “The government is committed to levelling up the country through digital infrastructure, and will not hesitate to act if required to protect our critical national telecoms infrastructure,” it said, citing the National Security & Investment Act that is due to come into force in January and could be used to block a takeover of BT.
BT issued a statement saying that it would continue to operate the business “in the interest of all shareholders”.
The UK company, like many of its European peers, has been under pressure for five years because of low growth, a poor share price performance and the need for high levels of capital spending to invest in fibre broadband and 5G.
Under chief executive Philip Jansen, who joined in 2019, it has pinned its strategy on a £15 billion (€17.5 billion ) fibre investment plan, which is supported by Drahi, and an overhaul of its business to save £2 billion of annual costs.
Mr Drahi’s call to Mr Crozier followed a meeting between Mr Jansen, Mr Crozier and Nadine Dorries, the culture secretary, earlier on Monday to discuss BT’s strategy, its fibre investment plan and the future ownership of the company with Drahi circling and private equity and infrastructure funds also linked to a potential investment.
Jerry Dellis, an analyst at Jefferies, said that the “serious intent from Altice contrasts with continuing lack of clarity in the government position over BT”.
Mr Drahi’s strategy of building a stake gradually is a new one for the billionaire who has previously acquired undervalued telecoms assets outright in France, the US and Portugal using debt before stripping out huge amounts of cost.
Altice surprised BT when it became its largest shareholder in June with a £2 billionn investment. Drahi set up a new company, Altice UK, to make the move having taken Altice, which was listed in Amsterdam, private due to its low valuation.
Mr Drahi reiterated on Monday that he did not intend to make an offer for BT but said that could change if a third party announces an intention or if Altice had agreement from the UK company’s board.
In the statement, Drahi said of BT’s management: “We continue to hold them in high regard and remain fully supportive of their strategy, principally to play the pivotal role in delivering the expansion of access to a full fibre broadband network”.
He has not yet sought a board seat at the company.
Shares in BT, which are up just over a fifth so far this year, were down 5 per cent in early trading. The stock trades 20 per cent below the 200p mark it reached in June when Drahi first invested in the business, despite a stronger financial performance and outlook from the company. – Copyright The Financial Times Limited 2021