The move follows billionaire Patrick Drahi failing to sell Altice Portugal to pay of some of the group’s $60bn debt
Patrick Drahi’s struggling Altice Group is to sell its stake in the UK’s BT Group to the Indian conglomerate Bharti Enterprises, which is controlled by billionaire Sunil Bharti Mittal. The Altice Group, which is controlled by Drahi, is BT Group’s biggest shareholder with a 24.5% holding.
Bharti lost no time in emphasising it has no intention of trying to buy the entire BT Group in a statement to the London Stock Exchange today.
The price for the stake has not been made public. A 9% stake was worth about £980 million according to the Daily Telegraph, citing New Street Research.
Drahi’s telecom empire, the Altice Group, was largely built by leveraging debt but inflation and higher interest rates means the $60 billion accumulated debt is more expensive to service. The Group is also subject to a criminal investigation in Portugal and France for alleged corruption.
Step by step
Altice Group bought its first, 21.1% stake in BT in June 2021, increasing it to 18% in December the same year then raising the stake to its current level in May 2023.
Bharti will also acquire its stake in stages. The Indian conglomerate said it would buy the first part, equivalent to 9.99% of the UK company imminently. The outstanding 14.51% will be bought when the company receives regulatory approval to do so. The Guardian reports that BT previously owned a 21% stake in Bharti Airtel and had two seats on its board between 1997 and 2001.
Bharti is applying voluntarily for clearance under the UK’s National Security and Investment Act. This gives the government oversight of takeovers involving critical infrastructure. The threshold for mandatory notification of the government is 25% ownership.
Drahi had been trying to sell Altice Portugal, the country’s renamed incumbent, but has been unable to reach agreement on the price with potential buyers, most recently reported to be Saudi’s stc.
Demonstrates confidence
Mittal said in a statement, “This investment demonstrates the confidence we have in BT and in the UK. BT has a strong portfolio of market leading brands, high-quality assets and an experienced management team with a compelling strategy mandated by the BT board to deliver value over the long term, which we fully support.
“BT is playing a vital role to expand access to full-fibre broadband infrastructure for millions of people across the UK. Its focus on strengthening its networks, driving consumer growth, and optimising every aspect of its business makes it well placed to consolidate its position as a leading global telecoms company.”
Allison Kirkby, the BT chief executive, said in a statement, “We welcome investors who recognise the long-term value of our business, and this scale of investment from Bharti Global is a great vote of confidence in the future of BT Group and our strategy.
“BT has enjoyed a long association with Bharti Enterprises, and I’m pleased that they share our ambition and vision for the future of our business. They have a strong track record of success in the sector, and I look forward to ongoing and positive engagement with them in the months and years to come.”
In what was widely interpreted as a show of confidence in Kirkby’s leadership, the Mexican billionaire Carlos Slim invested £400 million in 3% stake in BT in June.
Bharti entered the telecoms industry in 1995 although Mittal started his business empire in 1976 as a bicycle components maker. His interests now range from telecoms and satellites to hotels and property. The Bharti conglomerate plays a dominant role in India’s economy and Bharti Airtel is the world’s third biggest mobile service provider by subscriber numbers.