Bharti Enterprises to acquire 24.5% stake in BT from Altice

India’s Bharti Enterprises said it would acquire a 24.5% stake in BT, worth 3.2 billion pounds ($4 billion), to buy out the British company’s top investor Patrick Drahi as his Altice group speeds up asset sales to cut its debt burden.

The move by Bharti’s billionaire founder, Sunil Bharti Mittal, makes one of India’s biggest conglomerates a key strategic shareholder in BT, whose new CEO Allison Kirkby is striving to revive shares by promising higher profits after years of cost-cuttings.

Bharti, which owns the Bharti Airtel brand operating in 17 countries across South Asia and Africa, said on Monday it had no intention of buying all of BT, the former state monopoly which is Britain’s biggest broadband and mobile company.

It said it supported BT’s executive team and its “ambitious” transformation programme to deliver long-term sustainable growth, by building the country’s fibre network.

Drahi, a Franco-Israeli billionaire who made his fortune through debt-fuelled acquisitions in the telecoms and cable businesses, spent about 4.2 billion pounds for the 24.5% stake in BT, according to Reuters calculations, which he acquired in three steps from 2021 to 2023.

The telecoms tycoon’s Altice group has $60 billion in debt, spread across entities in the United States and in Europe. The deal sent shares in BT up 6% to 139 pence in early trading and will serve as an early test of new Labour government’s attitude towards foreign ownership of stakes in key sectors.

Bharti said it had already bought a 9.99% stake but would wait for the government’s national security clearance before it buys the remaining 14.51%.

“BT to my mind has a much brighter future ahead and they need to be following their strategy, if I may say, even more boldly,” Mittal told reporters.

He said that BT’s current share price allowed to evaluate the price of the stake acquisition, which would amount to 3.2 billion pounds according to Reuters calculations.

“We are not in this for making a buck or looking at stock markets up or down. We are long-term telecom investors.”

Mittal said he had been watching BT for some time and was recently approached by the seller, meeting BT management in recent months.

While BT’s shares have risen 24% in the last six months as its long-term fibre build starts to yield results, they have lost 72% since 2015.

Deutsche Telekom is a long-term holder of a 12% stake in BT, while in June this year Mexican magnate Carlos Slim bought a 3.2% stake in the company, a boost for Kirkby who became BT’s CEO in February.

She called Bharti’s investment a “great vote of confidence” in BT’s strategy.

Deutsche Bank analysts said the new shareholder removed an “overhang” from the stock caused by the pressure on Drahi to offload assets and noted potential for further cooperation between BT and Bharti.

In 2021 Drahi caused alarm when he bought into BT and its critical communications infrastructure, prompting the government to say it would intervene if necessary to protect the group.

Bharti said the deal was a vote of confidence in Britain and its stable business and policy environment, a possible nod to the new government after five years of turmoil under the Conservative party.

The group also noted its long-standing relationship with BT, which owned a 21% stake in Bharti Airtel from 1997 to 2001.

Asked how much Bharti had paid for the stake, Mittal pointed reporters to the market, noting that the shares had ranged between 130 pence and 142 pence, with a dividend paid out.

He said the group had not asked for a board seat, although he added that he had some “ideas” for management.

In May, Brookfield India Real Estate Trust (BIRET) has signed a binding agreement to acquire a 50% stake in four Bharti Enterprises properties for 60 billion rupees ($719 million), including debt, it said.

The deal will take place through a preferential allotment of units in BIRET at 300 rupees per unit to Bharti Enterprises, which owns telecom operator Bharti Airtel, in exchange for the stake.

The properties, some of which are used for commercial purposes, while others host offices and retail stores both, are located in New Delhi and Gurugram and measure a total of 3.3 million square feet in area. A boom in companies setting up offices in India, coupled with post-pandemic return-to-office requirements and strong retail consumption, have boosted optimism for commercial properties.

With 25.5 million square feet of total leasable area, BIRET is India’s fourth-largest listed REIT by market capitalisation, after Embassy Office Parks (EMBA.NS), Nexus Select Trust (NEXE.NS), and Mindspace Business Parks REIT (MINS.NS).

Agencies