Altice to sell BT stake to Bharti; DT holds firm

BT is about to see a change in its shareholder structure after India's Bharti Enterprises said it plans to acquire the 24.5% stake held by Patrick Drahi, who in turn is seeking ways to reduce the high debt levels at his Altice group.

In a statement on Monday, Bharti Global, the international investment arm of Bharti Enterprises, announced that it has reached an agreement with Altice UK to acquire about 9.99% "imminently," with the remaining 14.51% to be acquired following UK security clearance. The deal sent shares in BT up 6% to 139 pence in early trading.

Bharti, which is reportedly paying around £3.2 billion (US$4 billion) for the Altice shareholding, also made it clear that it has no intention of making an offer to buy all of BT.

Sunil Bharti Mittal, chair of Bharti Enterprises, pointed out that Bharti and BT have a longstanding relationship as BT previously owned a 21% stake along with two board seats in Bharti Airtel from 1997 to 2001.

"This investment demonstrates the confidence we have in BT and in the UK. BT has a strong portfolio of market leading brands, high-quality assets and an experienced management team with a compelling strategy mandated by the BT board to deliver value over the long term, which we fully support," Mittal said.

BT Group CEO Allison Kirkby described the investment by Bharti Global as a "great vote of confidence in the future of BT Group and our strategy."

"BT has enjoyed a long association with Bharti Enterprises, and I'm 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 ongoing and positive engagement with them in the months and years to come," Kirkby added.

DT stays put for now

The transaction will bring to an end Drahi's involvement in BT. The Altice owner is now intent on selling assets after building up an estimated $60 billion in debt. For instance, it recently agreed to sell global media platform Teads to Outbrain for about $1 billion.

Altice became BT's biggest single shareholder in 2021, when it acquired a 12.1% stake. It gradually increased its shareholding over the next couple of years to reach 24.5% in May 2023.

Deutsche Telekom remains BT's second-largest single shareholder with around 12.06%. Despite ongoing speculation about DT's plans for the stake, with reports suggesting that it either intends to exit BT or make a takeover bid, the German telco has largely kept a watching brief in the hope that BT's value will eventually improve.

During DT's results press conference last week, DT Group CEO Tim Höttges was questioned on whether or not DT would help BT "establish a better network quality" in the UK.

"We believe that BT has a lot of potential to catch up because they are pursuing the right strategy, and that's why we are shareholders. But right now we don't have any plans to do anything else there. And of course, the dividend yield is above 5% so that is a major additional payment to the pension fund," Höttges said, speaking via an interpreter.

Meanwhile, Mexican billionaire Carlos Slim recently acquired a 3.16% stake in BT. Slim and his family control América Móvil, which has its headquarters in Mexico City but operates under its Claro subsidiaries in many countries in Latin America and the Caribbean.