Patrick Drahi's Altice ups its stake in BT to 18%, No Takeover Bids Yet

Patrick Drahi, as expected, has increased his stake in BT from 12.1% to 18, for about £1 billion. However, he has made it clear that Altice will not move for BT's takeover, yet.

BT's Future Unclear as Altice Raises Stake to 18%

The industry has been anticipating a takeover bid for BT from Drahi and Altice; they have reiterated their stance of not doing so.

Earlier in June, the French telco bought a 12.1% stake in BT for about £2.2 billion. With the latest purchase, Drahi and Altice have increased their stake in BT to 18%, becoming BT's single largest stakeholder. Altice added that it has acquired “a further 585,476,188 shares in BT, increasing its ownership to 1,785,476,188 shares, which represents 18.0% of BT's issued share capital".

BT kept it brief with their acknowledgment of the move. Given the months of speculation around Drahi and BT, the move comes out as somewhat anti-climactic.

Drahi said, "we are pleased to take this opportunity to increase our shareholding in BT. Over recent months we have engaged constructively with the board and management of BT and look forward to continuing that dialogue. We continue to hold them in high regard and remain fully supportive of their strategy, principally to play the pivotal role in delivering the expansion of access to a full-fiber broadband network; an investment program that is so important to both BT and to the UK".

Interestingly, Altice has all but said that it will choose to ignore takeover rules as long as BT's board agrees, or if there's someone else with a takeover bid. Back in June, when Drahi first bought into Altice, it made a lot of noise. However, so far, this move seems like he has bought himself another 6 months; in June 2022, we might see another chapter in this drawn-out story.

Will Ambani Gatecrash the Drahi Party?

If anything, this move has definitely made the likes of Deutsche Telekom sit up straight. The telco had the largest stake till Drahi extended his own. However, when asked about a potential takeover bid, CEO Tim Höttges simply told that “something is going to happen”.

Incidentally, under UK takeover bids, if a single stakeholder has 30% or more share in a company, it has to launch a mandatory takeover bid. For now, Altice has placed itself in a good position. Right now, one can conjecture that Drahi might have eyes on Deutsche Telekom's stake as well; the 6 months he just got will allow him to rally the funds required to launch a takeover bid.

However, this also opens the door to other takeover bids; for outsiders, they only have to convince two shareholders for a takeover. This is where Mukesh Ambani comes into the scene. Though widely reported to go for BT, his camp has denied the rumors strongly. Before this move, Ambani had to talk with multiple stakeholders; now, he has to talk to two.

Given that Reliance Jio has been such a success in the Indian telecom sector, with over 400 million users, Mukesh Ambani wants to enter other markets. Right now, Airtel is the only Indian telco to operate abroad in the form of Airtel Africa. For Jio’s part, Ambani has set his eyes on Europe; the bid for T-Mobile’s Dutch arm further proves that point. Therefore, BT Group has emerged as a potential target for entry, first in the British market, then in Europe.