Bharti Global Acquires Altice UK’s 24.5 Percent Stake in BT Group

In a surprise development, Bharti Global (via Bharti Televentures UK Ltd), the Indian multinational conglomerate, has this morning formally agreed to acquire French billionaire Patrick Drahi’s (Altice UK) stake of 24.5% (issued share capital) – worth well over £3bn – in national broadband and telecoms giant BT Group.

The move comes only a couple of months after the richest man in Latin America, Carlos Slim, became one of BT’s largest shareholders after he took a 3.2% stake in the company (here), which at the time was said to be worth around £400m. BT’s other major shareholders include T-Mobile Holdings Ltd. (aka – Deutsche Telekom) on 12%, BNP Paribas (Suisse) SA on 10.8% and Schroder Investment Management Ltd. on just 2.12% etc.

Until today most of the speculation around a possible future takeover of the BT Group has tended to focus on Altice UK, which at 24.5% had been sitting just a hair below the all-important 25% threshold for marking out a Person with Significant Control (PSC) of a company. But now that position will be taken by Bharti Global and, so far, BT are publicly treating this as a positive endorsement.

Under the new deal, shares equal to 9.99% of BT’s stock will be transferred imminently, with the rest set will follow after regulatory approval. Bharti states that it will be applying for clearance under the UK’s relatively new National Security and Investment Act (NSIA), although this is unlikely to throw up any real obstacles until they go beyond the 25% mark (see Altice UK’s previous experience).

Allison Kirkby, BT Group’s CEO, said:

“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.”

Sunil Bharti Mittal, Chair of Bharti Enterprises, said:

“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.

Bharti’s own record of owning and operating telecom and broadband networks around the world is underpinned by placing customers, digital innovation, and operational efficiency at the heart of its business.”

The move comes after BT’s new CEO, Allison Kirkby, updated the operator’s business strategy with plans to double cash flow over the next five years, slash around £3bn of costs and boost the dividend. The changes have helped to give BT Group’s share price a much-needed boost, although this did recently take a hit, albeit due more to wider global economic concerns.

In terms of a possible future takeover, BT itself could be said to have overcome some of the obstacles and uncertainties 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 UK full fibre market, the high level of debt, high interest rates, political opposition and so forth).

However, doing anything serious on this front would require a green light from the UK Government, and there are some unknowns about how they might react following the recent General Election.