Get ready, then, for a newcomer in the great international sport of owning chunks of BT. Indian conglomerate Bharti Enterprises, led by the billionaire Sunil Bharti Mittal, is buying the 24.5% stake held by the French billionaire Patrick Drahi’s Altice Group. Bharti will be rubbing shoulders with Germany’s Deutsche Telekom (12%) and the Mexican tycoon Carlos Slim (3%).
Bharti looks to be a vast improvement on Drahi. The Frenchman distracted the market for a couple of years by being mysterious about his long-term intentions at BT, but it’s been obvious for a while that he had become a natural seller rather than buyer. He is now retreating, at a presumed heavy loss, to attend to the tower of debt within his wider Altice empire. With the overhang cleared via a clean-ish exit plan, BT’s shares perked up 8%.
It may still take Bharti a couple of years to unwind the derivative contracts used by Altice for a portion of its BT stake, but the preferred eventual structure, we’re assured, is a plain vanilla one. If so, good: BT, still only two-thirds of the way through building a fibre broadband network in the UK, doesn’t need short-term distractions created by a major shareholder’s financial contortions in the background.
An open question, though, is still Bharti’s long-term intentions at BT. The day-one purring about BT’s “market-leading brands, high-quality assets” and long-term stability was encouraging as far it went. But the bottom line is that its commitment not to make a full takeover bid is binding only for six months, as is normal.
That being so, the government could use the review of the transaction under the UK National Security and Investment Act (NSIA) to make a wider point about ownership of BT. In short: no overseas buyer should be allowed to own BT outright; a 25% stake ought to be the maximum allowed.
With a market value of only £14bn these days, BT may be only the 34th largest company in the FTSE 100 index, but it would be near the top of a ranking of companies whose infrastructure is crucial to the smooth functioning of the UK economy. A reliable, fast broadband network is non-negotiable in the digital age and BT will probably remain the biggest provider for decades given the lifespan of the kit. TheNSIA could almost have been drafted with the company in mind.
The best ownership model is the current one of a stock market listing. It offers more transparency and boardroom accountability than private ownership ever will. And, from a regulatory point of view, a publicly traded share price can serve as a signal of trouble ahead or as an indication of excess returns at the expense of customers. The example of the water industry in the past 20 years ought to be a neon-lit reminder of the perils of allowing critical UK assets to slip out of view and into faraway conglomerates or worse.
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Bharti and Mittal, then, should be thanked for their “vote of confidence in the UK”, the semi-mandatory utterance on these occasions. Their technical expertise in telecoms may even be useful. But Mittal should be told not to entertain any thoughts about ever going to 100%.