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Altice UK Acquires 12.1 Percent Equity Stage in BT Group

Thursday, June 10th, 2021 (7:21 am) - Score 3,744
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The UK telecoms giant, BT Group, has this morning confirmed that Altice UK, a business wholly owned by Patrick Drahi, has acquired a sizeable 12.1% equity stake in the operator (worth c.£2bn) and also issued a statement in support of the broadband and media firm’s current management and strategy.

According to the website for Altice, the company delivers customer-centric products and solutions that “connect and unlock the limitless potential of its over 30 million customers over fibre networks and mobile broadband.” Altice is also a provider of enterprise digital solutions to millions of business customers, as well as a provider of original TV content and live broadcast premium sports events.

NOTE: Altice formed the company Altice UK for the sole purpose of holding the BT stake.

Today’s move is significant because it means that Altice UK is now BT Group’s largest shareholder and will thus have some say in the operator’s future direction, as well as any potential acquisitions or take-overs further down the road (Deutsche Telekom is often linked to such an idea due to their 12% stake in the operator). The holdings notice is here.

Altice UK Statement:

“Altice holds the Board and Management team of BT in high regard and is supportive of their strategy. Altice UK has informed the BT Board that it does not intend to make a takeover offer for BT.”

BT Group Statement

“BT Group notes the announcement from Altice of their investment in BT and their statement of support for our management and strategy. We welcome all investors who recognize the long-term value of our business and the important role it plays in the UK. We are making good progress in delivering our strategy and plan.”

The move comes shortly after BT announced that they were ramping up their £15bn plan to deploy a new gigabit-capable Fibre-to-the-Premises (FTTP) broadband network across the United Kingdom (here), which will now aim to cover 25 million premises by December 2026.

At the time, BT said that it could fund the aforementioned build entirely from internal resources, but they also believed that it would be possible to “deliver further shareholder value by funding the additional 5m premises through a joint venture with external parties” and intended to explore joint venture structures over the first half of the current financial year.

 

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By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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11 Responses
  1. A_Builder says:

    Well it is undervalued so it is a good buy.

    Given that, as I predicted two years ago on here, less bad than advertised pension portion which will, if I read the runes correctly, continue to shrink as the actuarial tables are overwhelmed by reality (real life span as opposed to everyone will live longer and longer).

    The only question is how much of the market BT can capture before the alt nets make too much of a dent in it. I do think that this is the real fly in the ointment.

    The interesting bit here is that the investor is a streaming content producer. So this might create a synergistic way of BT getting its TV content costs down.

  2. Slow Caerphilly says:

    All the world’s a stage but can you really buy a stage in a company?

  3. Power to the People says:

    Well one company with massive debt has bought a chunk of another company with massive debt, with one would assume more debt.

    That’s going to end well ……..

  4. Mr Benn says:

    And you wonder why they are still not actually worth that much.

  5. CarlT says:

    Altice also took the liberty of buying 70% of Suddenlink and all of Cablevision in the United States and are part-way through overbuilding the hybrid / HFC network with full fibre.

    Believe they’ve built FTTP to over half of that footprint now and continue to build.

    Looking at BT’s stock price the market doesn’t think Altice are the last to take a chunk of BT’s shares and views this as a big positive. Going by their actions in the United States and France Altice are certainly aggressive in their aspirations for full fibre networks.

  6. Scott says:

    Guess this is a vote of confidence in the current changes being implemented by BT and Openreach.

    I suspect that whilst rollout plans continue the next significant measure of success (for Phil Jansen) is ramping up the share price/market cap to a point where takeovers are too prohibitive.

    1. A_Builder says:

      The issue is that the market is sceptical that BT will get on top of its management culture and therefore gets is costs under control.

      OR is a bit of a gem, increasingly anyway, and there are signs that management and costs there are starting to fall into line with expectations.

      Once there is a marked change in the finances being

      a) fall in the overhead base from the announced exchange closures and copper withdrawal; and

      b) a large switch over to FTTP (and off of copper DSL)

      Then the share price will rocket up.

  7. tonyp says:

    Altice might be registered in the UK (for taxation purposes?) but I’m sure the owner wants a good return on his investment, which will find its way into overseas pockets.

    With so much national infrastructure being bought and supplied to, by non-UK sources, is it any wonder that the UK is referred to as ‘Treasure Island’ in some circles?

    How do you service the corporate debt interest and remain profitable? Magic Money Tree I think.

    I guess we have the bankers but do we have the skills? Cynic? Moi…..

    1. CarlT says:

      You’re really not going to like who the 2nd largest shareholder is.

      Deutsche Telekom. Part of the EE deal was stock in BT Group.

    2. A_Builder says:

      “How do you service the corporate debt interest and remain profitable? Magic Money Tree I think.”

      Altice has bought shares in BT Group.

      BT Group have not borrowed money from Altice……

      So I think you are a bit confused.

      BT’s net debt and pension liability has actually fallen a bit inspire of the huge investments it is making into FTTP.

      Yes BT **might well** need to go to the markets for more investment but this can currently be had quite cheaply on the open markets given the proven appetite for investment in FTTP.

    3. tonyp says:

      @CarlT – You’re right. I suppose dividends (if any) have to be exported!

      @A_Builder – No, I am not confused. I am aware that Altice UK acquired 12.5% of BT equity. Altice appears to be a UK based shell company ‘wholly owned by Patrick Drahi’. Funds for the purchase did not come from BT Group, that would be absurd. However, given the size of purchase of BT shares, I doubt that would be wholly covered any high net worth individual, more likely from a hedge fund or a bank. I havn’t researched that. That’s fine while interest rates remain (artificially) low but that is an ‘if’. Lets hope it is really for the long term and shares don’t get dumped in a bear market.

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