A billionaire buying bits of BT needn’t ring alarm bells

A vote of confidence in the company? That’s always a board’s default spin on events when a billionaire buys a large stake, purrs politely about management but is slightly mysterious about his long-term intentions. The pitch is rarely convincing because billionaires are not generally the type to sit back and simply collect a stream of dividends. They tend to want something.

It’s too soon to be confident about the motives behind Patrick Drahi of Altice’s purchase of a 12.1% stake in BT, worth £2bn. But, on this occasion, the non-threatening interpretation may be correct. Or, at least, it looks the most likely line for a while.

For starters, the French-Israeli Drahi must know that a foreign-backed bid for BT (which can’t now happen anyway for six months) would provoke a political storm. The company, committed to spending £15bn on fullfibre broadband rollout in the UK in the next five years, is almost the definition of too-important-to-mess-with. It is probably not a coincidence that every time BT seems engulfed by financial crisis (2009-10 and again last year) the regulatory weather suddenly improves.

The latest outbreak of peace with Ofcom allowed BT to get its longed-for “fair bet” on long-term fast-fibre returns. Rishi Sunak, the chancellor, then made life sweeter by creating “super deductions” on infrastructure spending for two years, a tax policy that could almost have been designed with BT in mind.

That points to a second reason to favour the “vote of confidence” theory. If he wished, Drahi could have thrown a large sum at an fibre insurgent – CityFibre, say. But backing BT to remain streets ahead looks a sounder bet than ever if the regulatory set-up remains stable. If the plan to reach 25m premises by the end of 2026 is achieved, the company should emerge with control of about two-thirds of the UK’s fibre infrastructure. And the kit, remember, is meant to last decades.

See also  CAPITOL DIGEST: Bill to block internet pornography fails - Waterloo Cedar Falls Courier

Drahi, presumably, still wants something. But it may be only a seat on the board (hard to refuse since Deutsche Telekom, with a similar-sized stake, already has one) to give him a voice in any future spinoff of Openreach, the broadband subsidiary. Any tycoon-style craving for immediate excitement may be satisfied just by leveraging the £2bn investment via debt, on which front Altice revealed nothing.

We’ll await events but, on day one, BT’s relaxed view of its new shareholder is reasonable.



Please enter your comment!
Please enter your name here