By Lina Saigol
Billionaire Patrick Drahi’s Altice Group has snapped up a 12.1% stake in BT worth £2.2 billion ($3 billion), becoming the British broadband and mobile operator’s largest shareholder.
But the French telecoms and cable company said it did not intend to make a takeover offer for BT, adding that it held the group’s management in “high regard” and is supportive of its strategy for faster broadband in the U.K.
Altice has established a new company, Altice U.K., which is separate from its European and U.S. businesses, to hold the BT stake.
Shares in BT /zigman2/quotes/209006687/delayed UK:BT.A +1.38% rose more than 3% in early morning trading in London to 189 pence a share. The stock has gained close to 43% so far this year, according to FactSet.
“BT has a significant opportunity to upgrade and extend its full-fibre broadband network to bring substantial benefits to millions of households across the U.K. We fully support the management’s strategy to deliver on this opportunity,” Drahi said in a statement on Thursday. He added that Altice would use its expertise in building telecom networks in the U.S., France, Portugal and Israel, to help BT expand its high-speed broadband internet network.
Last month, BT set out an ambitious plan to take fast broadband fibre to 25 million homes and businesses by the end of 2026. Chief Executive Philip Jansen said at the time that he was seeking partners to help fund the £15 billion of investment needed for the rollout.
“We welcome all investors who recognize the long-term value of our business and the important role it plays in the U.K. BT said in a statement on Thursday. “We are making good progress in delivering our strategy and plan.”
Germany’s Deutsche Telekom /zigman2/quotes/206605042/delayed DE:DTEA +0.55% holds a stake of around 12% in BT.
Jefferies analysts said the investment was a “signal of confidence” from Altice in BT’s strategy. “A key issue now is how the French group intends to unlock value,” the analysts wrote in a research note to clients on Thursday, adding that encouraging BT to spin off its independently operated Openreach network seemed most likely.
Altice would be expected to push for change within the business, given BT’s need to find a solution to its stretched balance sheet, AJ Bell investment director Russ Mould said. “Selling or finding a partner for the sports broadcasting arm is one option that’s already on that table, with a successful deal letting it focus on the core telephony business.”
Under the U.K.’s Takeover Code, Altice will not be able to make an unsolicited bid for BT for six months, unless it has the approval of the British company’s management.
BT is also currently seeking to find a replacement for its chairman Jan du Plessis who is set to retire after four years in the role later this year.
Altice Europe’s SFR is the second largest telecoms operator in France behind Orange /zigman2/quotes/201008076/delayed FR:ORA +0.98% . Drahi took Altice Europe private last year, in a deal that led to the delisting of the company in January this year, after minority shareholders approved the buyout.