Analysis & Comment

Drahi lifts stake in BT to 18%, drawing defensive response from Britain

LONDON (Reuters) -Patrick Drahi said on Tuesday he had increased his stake in BT to 18%, drawing a defensive response from the British government even though the Franco-Israeli telecoms entrepreneur said he did not intend to launch a takeover.

FILE PHOTO: Patrick Drahi, Franco-Israeli businessman and founder of cable and mobile telecoms company Altice Group attends the inauguration of the Altice Campus in Paris, France, October 9, 2018. REUTERS/Philippe Wojazer/File Photo

Drahi, BT’s biggest shareholder who has pursued debt-fuelled deals to buy assets in France, the United States, Portugal and Israel, said he had engaged constructively with the board and management of BT and looked forward to continuing that dialogue.

A person familiar with the situation said Drahi had notified BT’s new chairman Adam Crozier on Monday after the market had closed. BT boss Philip Jansen and Crozier met Digital Secretary Nadine Dorries on Monday.

The British government said on Tuesday it was monitoring the situation closely and would not hesitate to act if required.

“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,” a spokesperson said.

Shares in BT, Britain’s biggest broadband and mobile operator, were down 4% at 167 pence in early trade.

The 175-year-old BT is in the middle of a $20 billion transformational programme to build a national fibre network, a strategy crucial both to the company and the government which is looking to boost regional growth levels.

While Britain has welcomed foreign investment and takeovers, any bid for BT would put ministers in a difficult position due to the national security implications of providing the country’s connectivity.

The former monopoly has been seen as vulnerable to a takeover as its shares remain around 65% below 2015 highs, prompting speculation that it could be bought before the benefits of the fibre build start to materialise.


Drahi announced in June he had bought a 12.1% stake in BT, worth 2.2 billion pounds ($2.9 billion) at the time.

He said on Tuesday that he continued to hold BT management in high regard and remained fully supportive of its strategy to play a pivotal role in delivering a full fibre broadband network; “an investment programme which is so important to both BT and to the UK”.

Drahi had not requested a seat on BT’s board, according to the person familiar with the matter.

BT noted that Drahi’s Altice UK had increased its stake.

“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,” the company said.

BT’s second largest shareholder is Deutsche Telekom. The German company’s boss Tim Hoettges said in September it was weighing its options for its 12% stake and expected some kind of movement in the next 12 months.

BT, led by Jansen, who made his own multimillion pound fortune from the payments processor Worldpay, has recently bolstered its takeover defences by hiring boutique advisory group Robey Warshaw.

It also added change-of-control clauses to some of its bonds and cut costs throughout the company.

Under British takeover rules, Drahi’s statement that he does not intend to make an offer for BT will bar him from such a move for six months.

That commitment can be set aside however under a number of circumstances, such as with the agreement of the BT board or if a third party announces a firm intention to make an offer.

He increased his stake, at a price of 1.02 billion pounds based on BT’s closing share price on Monday, after a previous six-months’ standstill expired at the end of last week.

($1 = 0.7569 pounds)

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