Investors drove shares in BT (BT.A) nearly 4% higher in early trade after news broke that Altice, the telecoms group founded by French billionaire Patrick Drahi, has taken a 12.1% stake in the UK telco.
Altice is an established name in the telecoms space and the purchase of a 12% holding in BT is a significant move, matching the stake already held by Deutsche Telekom.
But any hopes that Altice might be stakebuilding ahead of a buyout in the near-term were dashed with the French firm saying that it did not intend to bid for control of the company. Altice said it ‘holds the board and management team of BT in high regard and is supportive of their strategy,’ according to a statement.
‘Altice UK has informed the BT board that it does not intend to make a takeover offer,’ it said, with its stake being held by a new UK business set up for the purpose.
BT’s stock eventually stabilised at around 188.3p, about 2.8% up.
PRESSURE ON BROADBAND
BT has been under pressure in recent years due to the task of installing a fast fibre network across the UK while meeting the demands of a big pension fund and shareholders. The company said recently its network arm Openreach intends to install fibre broadband to 25 million UK homes and businesses by 2026 and would consider a partner to help fund the roll-out.
BT may have to sell its sports operations, which owns broadcast rights to some English Premier League matches and Champion’s League games, to help pay for the fibre investment.
‘BT has a significant opportunity to upgrade and extend its full-fibre broadband network to bring substantial benefits to millions of households across the UK,’ said Altice boss Patrick Drahi. ‘We fully support the management’s strategy to deliver on this opportunity.’
PUSHING FOR CHANGE
While Altice says there are no plans to make a bid at the moment, investors can probably expect the French firm to push for change within the business, given BT needs to find a solution to its very stretched balance sheet and the market's generally negative view of the company.
‘BT’s Openreach division is also seen as a valuable part of the operation and that could be sold off,’ said AJ Bell investment director Russ Mould.
BT last year was rumoured to have attracted private equity interest with KKR touted as a potential bidder.
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