Do not hang up. BT chief executive Allison Kirkby can breathe a sigh of relief. India’s Bharti on Monday announced The aim was to buy French telecoms tycoon Patrick Drahi’s nearly 25% stake in the British telecoms operator valued at $18 billion. The head of the British group can stop worrying about an over-indebted shareholder who might have been forced to sell his stake at bargain basement prices. But the change leaves her with a crowded shareholder base.
News of Drahi’s swap for Bharti sent BT’s share price up more than 6% on Monday morning. Investors had been worried that the French tycoon, who began buying in May 2021, could be forced to unwind his purchase as he deals with heavy debts in his Altice telecommunications empire.
Bharti will initially take a 10% stake in BT, roughly equal to the share Drahi owns in full. The remainder of the portfolio, which the Indian group will acquire after receiving UK regulatory approvals, consists of derivative contracts that the French tycoon used to build his stake. Bharti wants to offload that portfolio in an orderly manner, with the help of financial adviser Barclays, with the aim of owning the shares outright.
Mr Drahi’s bet on BT looks like a costly mistake. Based on BT’s share price when Mr Drahi announced his investments, the stake cost about £4.5bn. Mr Bharti said his purchase was based on the market price, which has recently ranged between 130p and 142p a share, implying an outlay of just £3.3bn at the midpoint. However, the derivatives contracts that limited Mr Drahi’s downfall may have transferred some of the hit to his banks.
Kirkby, whose efforts to turn the British group around have boosted the stock since he took over in February, celebrated The arrival of a new shareholder “with a solid track record of success” and the Indian group has allayed any possible fears that the new British government might have about the prospect of a large foreign group investing in an iconic company. Bharti will not ask for representation on the board of directors – at least for now – and has offered to submit to any security checks that the regulator may initiate.
However, Bharti’s intentions are as unclear as those of the French tycoon he replaces on BT’s shareholder register. The Indian group will sit alongside Deutsche Telekom, with a 12% stake, and Mexican billionaire Carlos Slim, with 3%. tenureThey may be demanding shareholders, but at least they can all afford the patience Kirkby has called for as he tries to get BT back on track.
Context news
On Aug. 12, India’s Bharti Enterprises announced it would acquire a 24.5% stake in British telecoms operator BT, valued at about 3.2 billion pounds ($4 billion), from tycoon Patrick Drahi. Bharti said in a statement Monday that it had no intention of making a bid to acquire all of BT, the former state monopoly that is Britain’s largest broadband and mobile phone company. The Indian company will buy an initial 9.99% stake before seeking to add the remaining 14.51% following U.K. regulatory approvals. Asked how much Bharti had paid for the BT stake, Chairman Sunil Bharti Mittal noted that the shares had recently bounced between 130 pence and 142 pence, with a dividend paid. He said the group had not asked for a board seat. BT shares were up 6.6% at 139 pence at 0930 GMT on August 12.
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