The group, controlled by billionaire Patrick Drahi, could fail further UK scrutiny as scandal engulfs Portuguese operations
French-Israeli billionaire Patrick Drahi is considering an increase to his stake in BT, according to MSN, citing “multiple City [of London] sources”.
He has acquired 24.5% of the UK incumbent in three tranches through the French headquartered telecoms firm he controls, Altice. The most recent of those three share acquisitions was in May this year, making him the biggest shareholder.
Pushing the limits
The “sources” reckon he is looking to raise this to 29.9%, which is immediately below the level at which (30%) a shareholder is obliged to make a formal offer to acquire the company.
Drahi has repeatedly maintained he has no intention of acquiring the company since he bought his first stake in BT of 21.1%, in June 2021. He increased the holding to 18% in December 2021. Still, such a large holding would leave him perfectly poised and both circumstances and people change.
On the other hand, an increase in Altice’s BT holding would automatically result in a UK government investigation under the terms of the National Security and Investment Act. It would probe whether foreign ownership of critical infrastructure is a potential threat to British national security.
Subject to investigation
The British government decided no action was needed under the Act when Altice’s stake rose to 24.5%. This is no guarantee that the outcome of another will be the same.
Altice’s case is unlikely to be helped by its co-founder Armando Periera being detained and questioned by a judge last week, according to Reuters, about alleged corruption at its Portuguese operations. This is part of an investigation into alleged corruption, tax fraud and money laundering.
The inquiry has forced Altice International’s Co-Chief Executive, Alexandre Fonseca, to suspend all his responsibilities within the group, which has also suspended several managers, employees and legal representatives in Portugal and elsewhere, Reuters says.
Fonseca is Chair of the Portuguese and US subsidiaries. Ana Figueiredo, CEO of the Portuguese subsidiary, will assume the duties as chair.
Local media reports the investigation is looking into the sale of various buildings in Lisbon when Fonseca was CEO of Altice Portugal, between November 2017 and April 2022. The sales allegedly deprived the company of hundreds of millions of euros.
Scandals cast long shadows
BT’s share price has never recovered from an accounting scandal, which was made public in 2016, at the Italian subsidiary of what was then BT Global Services and is now BT Business. BT Italy was accused to inflating sales and concealing losses to the tune of just over £500 million.
Group CEO Philip Jansen has said he will exit the company in the coming year having taken up the post in 2019 and failed to improve BT’s share price.
Deutsche Telekom (DT) is BT’s second largest shareholder with 12.5% as a result of BT acquiring EE in 2015. EE was a merger of Orange’s UK opco and DT’s T-Mobile UK. In an interview with the Financial Times earlier this year, DT Group’s CEO, Tim Höttges, said he regretted DT taking the £5.6 billion stake in BT.
BT’s share price then was £4.52, now it’s £1.259.
Orange accepted a 4% stake as part of the deal, but sold it subsequently. At the time of the EE deal, it was widely believed the two were considering a joint bid to acquire BT.