Patrick Drahi’s Altice raises stake in BT to 18%

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Patrick Drahi’s telecoms investment group Altice has increased its stake in BT to 18 per cent but said it does not currently plan to take over the former British telecoms monopoly.

The company has been on the alert since takeover restrictions on Altice, which built a 12 percent stake in June, were lifted last week. Drahi said on Tuesday that he had “constructively engaged with the board and management of BT” and that he had no intention of making an offer.

BT was told of Altice’s latest move on Monday after markets closed when Drahi called BT President Adam Crozier to inform him that it now had an 18 per cent of the voting rights.

The UK government has since fired a shot through the Altice arcs. “The government is committed to improving the nation’s level through digital infrastructure, and will not hesitate to act if necessary to protect our sensitive national communications infrastructure,” she said, citing the National Security and Investment Act due to take effect in January. It can be used to prevent BT seizure.

BT issued a statement saying it would continue to run the business “in the interest of all shareholders”.

The British company, like many of its European peers, has been under pressure for five years due to low growth, poor stock price performance and the need for high levels of capital spending to invest in fiber broadband and 5G.

Under chief executive Philip Janssen, who joined in 2019, it has anchored its strategy to a £15 billion fiber investment plan, backed by Drahi, and an overhaul of its business to save £2 billion in annual costs.

Drahi’s call for Crozier followed a meeting between Janssen, Crozier and Nadine Doris, culture secretary, earlier on Monday to discuss BT’s strategy and plan for investing in fiber and the company’s future ownership with Drahi Circling, private equity funds and infrastructure also linked to a potential investment.

“The serious intent from Altice contrasts with the continued lack of clarity in the government’s position on BT,” said Jerry Dellis, an analyst at Jefferies.

Drahi’s incremental stake building strategy is a new strategy for the billionaire who previously acquired undervalued telecom assets in France, the United States and Portugal using debt before dumping huge amounts of cost.

Altice surprised BT when it became its largest shareholder in June with an investment of £2 billion. Drahi set up a new company, Altice UK, to make the move after Amsterdam-listed Altice went private due to its depreciation.

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Drahi reiterated on Monday that he does not intend to make an offer to BT but said that could change if a third party announces an intention or if Altice receives approval from the British company’s board of directors.

In the statement, Drahi said of BT’s management: “We continue to give them great respect and remain fully supportive of their strategy, primarily to play a pivotal role in expanding access to the full fiber broadband network.”

He has not yet sought a seat on the company’s board of directors.

Shares of BT, which are up just over a fifth so far this year, are down 5 percent in early trading. The stock is trading 20 percent below the 200-point level it reached in June when Drahi first invested in the business, despite the company’s strong financial performance and financial outlook.

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