- 24.5% stake bought from Altice UK
- BT a minority shareholder in Bharti Airtel
- Shares up 20% over past year
BT (BT.A) shares rose over 6% to 139p in morning trading as investors welcomed the news leading Indian business group Bharti Global has bought a 24.5% stake in the telecoms giant from Altice UK.
Altice UK is part of French billionaire Patrick Drahi’s telecommunications group Altice, which according to media reports has been struggling with approximately €60 billion worth of debts.
The purchase is being made through Bharti Global’s international investment arm Bharti Enterprises.
Bharti will acquire an initial 9.99% stake before buying the remaining 14.51% following regulatory approvals, including voluntarily applying for clearance under the UK National Security and Investment Act.
Sunil Bharti Mittal, chair of Bharti Enterprises, said: ‘The investment is a vote of confidence in the UK as an attractive global destination for investment, with a stable business and policy environment attractive for long-term investors.
‘It builds on Bharti’s significant record of long-term investments across the UK and longstanding familiarity with BT’s business, BT having been a significant minority shareholder in Bharti Airtel from 1997 to 2001.’
Bharti Airtel is a global mobile operator, with networks that cover more than two billion people, connecting over 550 million customers in 17 countries across South Asia and Africa.
BT’s CEO Allison Kirby greeted Bharti Enterprises’ move positively, highlighting its strong track record of success in the sector.
EXPERT VIEW
AJ Bell investment director Russ Mould said: ‘The news Indian telecoms firm Bharti is taking a major stake in BT is reflective of a big power shift between the two companies. Around the turn of the millennium, it was BT which had a substantial holding in Bharti, as well as two seats on its board.
‘Bharti is buying its stake from French telecoms tycoon Patrick Drahi’s vehicle, Altice, and the news will likely be greeted with some relief by shareholders as it holds the promise of a bit more stability.
‘Drahi has been selling assets to pay down debt so his stake in BT represented a significant overhang on the shares.
‘This situation won’t be resolved overnight given Bharti is acquiring the stake in two tranches, with the second tranche dependent on regulatory clearance. Inevitably there will be speculation about what Bharti intends to do with its stake but, for now, it is ruling out any bid for BT.
‘Investors are not able to extrapolate anything about valuation either given the price Bharti is paying has not been disclosed.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (James Crux) own shares in AJ Bell.
