Altice gets regulatory green light for added stake in BT

Despite previous worries by UK government of potential threat to levelling-up agenda on broadband, corporate regulatory probe finds no issue with increase in stakeholding by long-rumoured potential buyer of UK incumbent telco

In a move that has already won approval from the UK’s financial community, BT Group has now been notified by the secretary of state that no further action will be taken regarding the increase in shareholding in the UK incumbent telco by Altice UK boss and millionaire investor Patrick Drahi.

The telco has announced that on 26 May 2022, it had received notification from Kwasi Kwarteng, secretary of state for business, energy and industrial strategy, that he had considered the increase by Altice Europe NV of its shareholding in BT Group from 12.1% to 18% and was exercising his call-in power under section 1 of the National Security and Investment Act 2021.

It was first revealed in December 2021 that Drahi had upped his stake in the UK national telecoms provider, prompting at the time mass talk of a takeover across the telecoms industry and drawing the UK government to fire a shot across the bows of the billionaire, warning of possible regulatory intervention if any act went against what was perceived as the national interest.

Altice UK had acquired the 12.1% share in June 2021 for a sum reportedly in the region of £2.2bn. Part of the deal included a no-bid clause under UK takeover rules that ran until 10 December 2021. Since then, the telecoms industry has been waiting for Drahi’s next move regarding BT, which in November 2021 released a mixed set of half-yearly results, showing revenue decline in its key business lines but with acceleration in the adoption of gigabit fibre broadband.

Directly after increasing its shareholding, Altice UK issued a statement assuring that it did not intend to make an offer for BT and that it would be bound by that statement for the purposes of Rule 2.8 of the UK’s Takeover Code.

“We are pleased to take this opportunity to increase our shareholding in BT,” said Drahi at the time. “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-fibre broadband network – an investment programme that is so important to both BT and to the UK.”

In its results for the quarter ended 30 June 2022, BT Group reported that revenue had inched up by 1% on an annual basis to £5.1bn, due to improved pricing and trading in its Consumer and Openreach divisions driving adjusted Ebitda of £1.9bn, up 2% primarily due to flow-through from revenue and cost control.

Reported profit before tax was £500m, down 10% annually because of increased depreciation offsetting Ebitda growth. A reported enterprise revenue decrease was primarily due to challenging market conditions in large corporates, ongoing legacy product declines and the migration of a wholesale mobile virtual network operator customer that concluded in FY22.

However, the company said it was continuing its focus on fibre and 5G. First-quarter fibre build and connection growth were said to be beyond expectations, with the quarter showing a record quarterly fibre-to-the-premises (FTTP) networks build of 763,000 and net adds of 302,000.

The company’s reported capital expenditure was down 17% to £1.3bn, mainly due to increased investments on the build and provision of FTTP networks, as well as cost inflation. The results also showed the company’s 5G ready base now stood at 7.7 million.

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