Altice bets on British fiber with £ 2 trillion BT

Altice, the telecommunications investor controlled by billionaire Patrick Drahi, has bought a 12.1% stake in BT for a value of £ 2 billion, making it the largest shareholder in the British company.

The acquisition marked a return to business for the Luxembourg-based company, which had shrunk in the last two years. reduce their debt. The investment in BT, made through a new British holding company separate from Altice’s main operations, represents Drahi’s boldest move since acquiring two American cable companies five years ago.

Altice said he had no intention of making an offer for the British telecommunications company, meaning that, according to the transmission code, he could not make an unwanted purchase offer for six months without the approval of management. of BT, and will not be offered a seat on the board.

The stake in BT was a change of course for Drahi, whose previous acquisition strategy was to take control of undervalued telecommunications assets by increasing debt and then eliminating costs and selling assets. . His support for the existing management team and his long-term vision on the company’s role in fiber manufacturing, where the UK lags other markets, is a new approach.

Deutsche Telekom remains a 12 per cent shareholder in BT, meaning that the British company has the largest telecommunications group in Europe and the most aggressive business in the sector as its two largest shareholders.

Altice bought shares in the open market through banks including a £ 810 million deal, but reported only BT’s 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 direct knowledge of the situation said a takeover bid was unlikely to succeed. “A complete recovery (from BT or Openreach) could come in the political opposition given the strategic importance of the networks,” said Jerry Dellis, an analyst at Jefferies.

BT’s share price has risen 90 percent since hitting 11-year lows last summer, including a 5 percent jump last week. It gained 1 per cent to £ 1.87 after Altice’s stake was revealed on Thursday.

The recent stock price rally was driven by a series of positive events for BT, including a move by regulator Ofcom to ease the regulatory burden on companies investing in fiber upgrades and the government’s decision to introduce tax breaks on capital investments that have strengthened the company’s hand.

Drahi, who owns an auction house Sotheby’s, said it believed BT was the best place to take advantage of the huge investment in upgrading British full-fiber broadband networks, a position which was not reflected in its share price. .

“BT has a significant opportunity to upgrade and expand its broadband fiber broadband network to bring substantial benefits to millions of households in the UK,” Drahi said. “We fully support the management strategy to seize this opportunity.”

Philip Jansen, executive director of BT, argued that the company needs long-term investors while undertaking a costly restructuring of the network. Since joining Worldpay in 2019, the private equity-backed payment company, telecommunications has led discussions with infrastructure and sovereign wealth funds over its £ 15bn network upgrade plan. and considered carrying a financing partner to put more fiber in rural areas.

Jansen said: “Investing in this scale by respecting the industry leader is a great vote of confidence in BT’s bold plans to be the market leader in next-generation digital connectivity. spoke with Patrick to welcome him and look forward to him and continuous discussion. “

Altice’s investment also comes when BT is looking for a chair to replace Jan du Plessis, who is due to resignation the summer after a failed meeting room.

Altice he dismissed his actions in Amsterdam last year after arguing that they were undervalued. This was part of efforts to strengthen its vast empire – which covers France, Portugal, Israel, the United States and the Dominican Republic – following a series of cost-cutting moves and asset transfers in recent years. He also divided his American business into a separate company. The BT movement followed a $ 7.8 billion attempt failed bought Canadian cable company Cogeco last year.

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