India’s Bharti Enterprises has swooped in to buy the 24.5 percent stake in BT Group from Patrick Drahi’s Altice, at a stroke making it the biggest shareholder in the UK telecoms giant.
BT Group, the UK’s former state-owned telecoms monopoly, issued a statement today noting that Bharti Global has reached agreement to acquire nearly a quarter of the issued share capital of the company from Altice UK, valued at around £4 billion ($5.1 billion).
The Indian biz, owned by billionaire Sunil Bharti Mittal, operates Bharti Airtel, a telecoms group said to have more than 400 million customers in India plus operations in Africa.
The shares will be purchased via Bharti Televentures UK Ltd – a company established and wholly owned by Bharti Global, which appears to have been incorporated in Britain on 30 July, according to information at Companies House, the registry for all UK businesses.
“This investment demonstrates the confidence we have in BT and in the UK,” Mittal said in a statement.
“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.”
The current head of BT’s Digital division Harmeen Mehta served for seven years as Group CIO at Bharti Airtel, before being hired to her current role in 2021.
This latest move was welcomed by current BT CEO Allison Kirkby, who said the company had enjoyed a long association with Bharti Enterprises and that it shared BT’s ambition and vision for the future of its business.
“We welcome investors who recognize 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,” she said.
“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,” she added.
Reports suggest that Altice, owned by French telecoms billionaire Patrick Drahi, is selling off assets in an attempt to cut some of its debt after years of acquiring numerous other telecoms operators.
The company was hit last year by a corruption investigation that led to the arrest of a co-founder and was said to have debts of more than $60 billion, according to some estimates.
PP Foresight founder and telecoms analyst Paolo Pescatore called it a “surprising move for Bharti,” but said it reinforces BT’s current strategy for long term growth and a strong validation of Kirkby’s leadership.
“The move underlines the challenges many telcos are currently facing with huge debt piles. With few options, the sale and much needed cash will go some way to satisfying (Altice) shareholders,” he added.
Kester Mann, analyst at CCS Insight, told us Bharti’s decision to buy a stake in BT “represents growing investor confidence in the enterprise” following the $400 million worth of stock bought by Mexican entrepreneur Carlos Slim in June.
“Alison Kirkby’s strategy of cost-cutting measures has resonated with investors, who have gone from shorting shares to having major international backers within a few months.
“BT’s announcement that it passed peak capital expenditure back in May will further encourage shareholders to invest, as BT is set to benefit from its impressive Openreach program.,” he added.
Mann cautioned, however: “The UK government may want to investigate this on national security grounds given the scale of UK telecoms infrastructure [that] is controlled by BT.”
However, Altice’s stake in BT shares had previously sparked concerns that Drahi was intending to make a bid for overall control of the Brit telecoms giant.
Like Altice before it, Bharti said in a statement that it has “no intention of making an offer to acquire the Company and is bound by the terms of Rule 2.8 of the UK Takeover Code in that respect.”
The move has seen BT’s shares rise 7 percent, according to financial news site Morningstar. However, even with this uplift, the price of £138 ($176) is still far below the high of £206 ($262) they reached back in 2019.
In the 12 months ended March 31, 2024, BT reported a one percent uplift in revenue to £20.79 billion ($26.53 billion) and a 55 percent plunge in profit after tax to £855 million ($1.091 billion). ®