Big question for BT after Indian billionaire takes stake | Business News

BT Group swapped one billionaire shareholder for another.

Sunil Bharti Mittal, the Indian billionaire, announced that his conglomerate Bharti Enterprises has purchased the 24.5% stake in BT previously held by French billionaire Patrick Drahi.

Drahi, owner of Altice, the second largest French telecommunications company, first acquired a 12.1% stake in BT in June 2021 and build it over time.

More recently, however, there has been speculation in the city that he intended to sell his stake in order to pay off part of the estimated $60 billion (£47 billion) debt that Altice has accumulated. Bharti is believed to have paid around £3.2 billion for the stake.

Allison Kirkby, BT’s newly arrived chief executive, will be too polite to say this publicly – but it’s a safe bet she’ll be delighted to see the back of Drahi.

Speculation that he intended to sell his stake in BT depressed the company’s share price, which had long been a source of frustration for Philip Jansen, his predecessor.

BT shares were up as much as 7.5% at one point today due to the removal of what was seen as excess stock.

Ms Kirkby said today: “We welcome investors who recognize the long-term value of our business, and this scale of investment from Bharti Global is a huge vote of confidence in the future of BT Group and our strategy.

“BT has enjoyed a long association with Bharti Enterprises and I am pleased that they share our ambition and vision for the future of our business.

“They have a strong track record of success in the sector and I look forward to continued positive engagement with them in the coming months and years.”

These sentiments will no doubt be shared by the UK government as well.

Drahi’s arrival on the BT share register caused discomfort in Whitehall and, when he increased its stake to 18% in December 2021the Johnson administration indicated it would intervene if he made a full takeover bid.

Vote of confidence

The big question is what Bharti, who today ruled out making a bid for BT, intends to do with her stake.

The Indian company said it supports BT’s executive team and strategy and sees its investment as a “vote of confidence in the UK as an attractive global investment destination, with a stable business and political environment attractive to long-term investors.” ”.

The company noted today that it has a “significant history of long-term investment across the UK and a long-standing familiarity with BT’s businesses” and highlighted that from 1997 to 2001, BT was a significant minority shareholder in Bharti Airtel, with a 21% share. .

Bharti Mittal, who revealed today that she has already met with BT management, added: “In my opinion, BT has a much brighter future ahead of it and they need to pursue their strategy, if I may say so, even more boldly.

“We’re not in this to make money or to see the stock markets go up or down. We are long-term telecommunications investors.”

Strong and stable

It is certainly fair to say that BT looks like a more stable businesstoday than for most of this century.

Under Jansen, the company invested heavily in Openreach, its infrastructure arm, to extend full fiber to the facilities even, at one point, discarding its dividends to shareholders.

Jansen also mended the company’s previously troubled relationship with Ofcomits regulator, as well as presenting an inventive solution to its previously troubled BT Sport business, which was parked in a joint venture with US media giant Warner Brothers Discovery, with BT retaining the option to sell its participation to the latter.

Since then, Kirkby, who took over in February, has stepped up the cost-cutting previously begun by his predecessor and announced plans to increase the dividend.

BT’s latest results, published just under three weeks ago and covering the three months to the end of June, saw underlying operating profits beat expectations.

Arguably, none of this progress has been reflected in BT’s share price, which has risen by a quarter over the past six months but has nevertheless fallen by around a third since Drahi first declared a stake in the company.

But those who are familiar with Bharti Mittal’s track record will know that he is not just a value investor.

He said today that he sees the BT stake as a way of building synergies between the UK and India in areas such as artificial intelligence, engineering and research and development into 5G networks.

This is also something that is at the heart of the new UK government.

Last month, during a trip to Delhi by the new Foreign Secretary David Lammythe United Kingdom and India announced a Technology Security Initiative, under which they committed to deeper collaboration in a number of sectors – mainly telecommunications.

Therefore, today’s announcement should be seen very much in that context.

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Indian incursions

It also has to be seen in the wider context of Indian investment in the UK.

Bharti is just the latest in a long list of major Indian companies that have invested in flagship UK companies.

THE Tata Group bought Corus, the largest steel company in the United Kingdom, in 2007 and, a year later, bought Jaguar Land Rover from Ford. Even before that, in 2000, he purchased the Tetley tea brand.

Other major investors include Mahindra & Mahindra, which in 2016 acquired motorcycle manufacturer BSA, and Chennai-based TVS Motors, which in 2020 bought famous motorcycle manufacturer Norton.

A third UK motorcycle brand, Royal Enfield, has been part of Delhi-based Eicher Motors for 30 years.

Other well-known UK brands with Indian owners include Christy, inventor of the world’s first cotton towel, which was bought in 2010 by Mumbai-based Welspun India.

All of these companies have proven to be good asset owners in the UK and, crucially, they are in it for the long term.

Bharti’s fellow BT investors – who include Deutsche Telekom and Mexican billionaire Carlos Slim – hope this is confirmed here.