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BT Takeover Fears Mount as Altice UK Boost Stake to 18 Percent UPDATE

Tuesday, December 14th, 2021 (7:49 am) - Score 3,984
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Broadband giant BT, which has recently been busy boosting their defences against a possible takeover attempt by Patrick Drahi’s Altice UK, has today reported that the investor has raised their 12.1% stake in the operator (worth c.£2bn) to a total of 18%.

The end of last week was an important date in BT’s calendar because it marked the point where Altice UK would no longer be bound by a commitment it made not to launch a takeover bid for BT. “Altice UK has informed the BT Board that it does not intend to make a takeover offer for BT,” said the company in June 2021. But few ever took that seriously, not least because such statements are only considered binding for 6-months.

NOTE: Back when BT and EE merged the company’s shares were worth 441p, but today they’re 175p and this will no doubt change over the next few hours.

Since then, BT is widely reported to have hired the same advisory firm that employs the former UK chancellor (George Osborne), Robey Warshaw LLP, to work alongside Goldman Sachs and strengthen its defence against a potential takeover.

The operator’s board are understood to have been sensibly planning for different scenarios, such as a formal takeover offer or a demand for BT to spin off its consumer division (i.e. BT, Plusnet and EE) or network access division (Openreach). The big move itself hasn’t come today, but Altice UK has given a pretty big indication of their desire to do more than just quietly sit on their stake.

BT Statement

The Board of BT Group has been notified that Altice UK has increased its interest in BT Group’s voting share capital from 12.1% to 18.0%.

The Board and management of BT Group will continue to operate the business in the interest of all shareholders and remains focussed on the successful execution of its strategy and building on recent performance momentum.

A Government spokesperson said:

“The Government notes the latest acquisition of BT shares by Altice. We are monitoring the situation carefully.

The Government is committed to levelling up the country through digital infrastructure, and will not hesitate to act if required to protect our critical national telecoms infrastructure.”

Altice UK Statement

“We are pleased to take this opportunity to increase our shareholding in BT. Over recent months we have engaged constructively with the board and management of BT and look forward to continuing that dialogue. We continue to hold them in high regard and remain fully supportive of their strategy, principally to play the pivotal role in delivering the expansion of access to a full fibre broadband network; an investment program which is so important to both BT and to the U.K.”

In the past, potential suitors have often ended up being discouraged by various concerns over the operator’s complex regulatory position, uncertainties around the outcome of Brexit, challenges due to massive debt (£18.2bn) and pension (£50bn) liabilities, as well as various other issues.

However, the market and BT have gone through a number of key changes over the past 1-2 years. For example, the new UK and EU trade deal has helped to make the post-Brexit future easier to predict. Openreach have also gained some longer-term regulatory certainty from Ofcom, which has enabled them to dramatically expand their £15bn rollout plans for Fibre-to-the-Premises (FTTP) broadband technology – aiming to cover 25 million UK premises by December 2026.

However, the operator is also still trying to figure out a solution for their TV Sport business (sale or partnership), which many have often regarded as a distraction from their core telecoms and broadband business. More job losses are also a possibility in the future.

In short, BT has overcome some of the problems that often-discouraged potential bidders in the past, although there are still plenty of hurdles for a suitor to consider (e.g. the increasingly competitive full fibre market). Any play for the UK telecoms giant will still be a complicated affair, as the bidder will also need the Government on their side – they’re currently minded to protect key players in the British technology sector.

Communications is a mandatory notification sector under the new National Security & Investment Act, which gives powers to intervene in acquisitions which raise national security concerns. The Act comes into force from 4th January 2022, but following commencement on this date, the Government will be able to consider acquisitions that have taken place since 12th November 2020.

None of this means that such a bid will suddenly arise, indeed if one is to surface then tentative early talks would probably occur first and a formal bid would then follow later in 2022. Speaking of which, a few months ago we noted that Deutsche Telekom (DT), which has long been linked with speculation of a takeover attempt and also holds a 12% stake in BT, added further fuel to the fire by alluding to the possibility of a deal between DT, Altice UK and others for BT (here).

At the time DT’s boss, Tim Hoettges, said: “In the next 12 months something is going to happen there around [our 12% stake in BT] … We are entertaining all options. We have a lot of optionalities now on the table in the BT business. We will do something which is a good deal.”

 

UPDATE 15th Dec 2021

We’ve added the statement from Altice UK above, which has today reiterated that they don’t intend to launch a takeover attempt.

Leave a Comment
8 Responses
  1. A_Builder says:

    Gosh

    No comments after a few hours.

    I suppose you do have to pay for the usual British handwringing approach to investment.

    Now it is trendy to invest in FTTP – every man dog and pension fund wants in.

    The dumb belief that it is more “efficient” to wring drips out of existing resources rather than rolling investment.

    It is that belief mechanism that strangles everything including the NHS.

    When we stop actuaries running UK PLC’s and have boards that stop thinking soley about the next two dividends then UK PLC’s might actually become world beating again.

    I suppose the question is: how vital is it who owns BT?

    The OR bit, which is the vital bit is highly regulated. Most of the rest of it is not that critical as there are other reasonable sized players?

    Ho hum…….

    1. anonymous says:

      Did read it a while back but no idea what to say. Foreign direct investment in the UK dropped big time in 2016, hasn’t recovered, and our companies deriving much of their revenue from domestic operations are relatively cheap. Our stock market hasn’t come close to keeping up with our peers.

      Who actually owns BT stock right now? Could easily be majority off-shore owned already.

  2. Chris says:

    “ No comments after a few hours.”

    Everyone is too busy queuing for their 5th jab.

    1. anonymous says:

      Or out and about after their 3rd doing their thing.

      Can’t speak for everyone but I’ve been working.

    2. A_Builder says:

      My point, in the original comment, being essentially that here is the biggest network provider in the UK and it is at risk of being taken over.

      On a thread bout VM going FTTP there are 60-70 comments.

      On this thread we have got to six comments at time of posting.

      I was just reflecting on that……

    3. anonymous says:

      Many of the VM comments are complaints about the company’s customer services and coverage.

      Quality over quantity for sure!

  3. Nick says:

    The only way to stop it is for the government to pass an Act that caps foreign ownership of Plc’s at 20% for future M&A’s so in future Altrice would not be able to go beyond 20% and they may lose interest in BT if that’s the case as they would want to own 100% of it.

    Some people ask how is it important about who owns what, but the reality is, foreign ownership means just average investment in infrastructure whilst using the UK businesses as a cash cow.

    Foreign governments sometimes own shares as much as 100%

    EDF Energy is a French state owned company and was in the media some time ago that we are paying Paris’ electric bill, electricity was double of what it was in France and at the time EDF Energy even owned the physical power network across London,East Anglia and South East.

    Abellio buses and trains who are making a mess of Scotrail and Greater Anglia is a Dutch state owned company.

    Arriva, possibly the largest transportation company in the UK who have also made a mess of Northern rail and in the past Arriva Trains Northern who have had that franchise taken away twice now is a German state owned company (Deutsche Bahn)

    RWE who made a mess of Thames Water before selling it off and the former owner of Npower was also partly owned by the German state.

    Trenitalia partly own Avanti Westcoast and own all of c2c promised the world, but is majorly expensive, this is a Italian state owned company.

    Keolis who have their fingers in a lot of pies when comes to railways made a mess of Govia who had the Southeastern franchise taken away, this is a French state owned company

    The list goes on and on!

    Then we have the foreign private companies that aren’t attached to foreign governments… look at Virgin Media and Three as well as O2, all using foreign call centres providing diabolical customer service aren’t helping boost jobs in the UK are they, Liberty Global,Telefonica and CK Hutchison are using as cash cows but contribute little to our country.

    So this is why it is important who owns what.

    In the 80s and 90s when the government decided to privatise everything, they failed to implement regulations and Acts that would control foreign ownership and because of that, it has gone out of control.

    People thought leaving the EU would help but it doesn’t work like that, the government needs to step in and make our pic’s less attractive.

    But with BT, if it wasn’t Altrice, it would have been Deutsche Telekom and there is still a slight chance of them increasing their share in BT.

    1. Snip says:

      Most of Virginmedia is in the UK, and there are rumours of a new U.K. site opening early next year

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