Altice buys 12% of BT and expects us to believe it just wants to help

French telecoms group Altice has bought 12.1% of UK operator BT’s shares and reckons BT needs top tips on fibre rollout.

BT’s shares were trading at around £1.80 before the news, so 1.2 billion of them will set Altice back close to £2.2 billion. It even created a special little company called Altice UK to do the buying. The stated reason for the surprise investment is that Altice really likes what BT (Openreach, to be precise) is doing with its fibre rollout and wants a piece of that action. Somewhat contradicting that position, Altice reckons BT could do with its help in the same endeavour.

“The expansion of the broadband network is one of the UK Government’s most important policy objectives and a core part of its levelling up agenda,” said Alice boss Patrick Drahi, who is the sole owner of Altice UK. “Following the recent settlement of the regulatory framework the new executive team at BT has developed a clear strategy increasingly to focus its capital resources to deliver the roll out programme.

“We fully support this strategy and I believe that Altice can, through working in partnership with the Executive and Board of BT, bring deep additional experience, expertise and pace to enhance and accelerate this investment programme.

“We look forward to engaging with the Board of BT and Philip Jansen, as we seek to work together to accelerate the effectiveness of its strategic broadband roll-out. We are confident that in doing so we can bring substantial benefits to the UK as a whole, to BT, and their customers and shareholders.”

It’s not clear whether Drahi checked in with Jansen and the board before he delivered his fail accompli but the clipped BT statement implies not. “BT Group notes the announcement from Altice of their investment in BT and their statement of support for our management and strategy,” it said. “We welcome all investors who recognize the long-term value of our business and the important role it plays in the UK. We are making good progress in delivering our strategy and plan.”

The biggest single shareholder in BT prior to this move was DT, which got the equity when it flogged its half of EE to BT. It looks like Drahi has bought just enough to relegate DT into second place. “Altice acquired its voting rights on 7 June,” said an emailed research note from Jeffries. “DTE confirms that its 12.06% BT stake is retained. Nonetheless, symmetry suggests connection, particularly in the absence of disclosed selling by other BT holders.

“Recent spike in BT short interest points to derivative transaction, which may hold BT’s share price around an (unknown) strike price in the near-term. Would also explain why Altice has not yet requested a board seat. A key issue now is how Altice intends to unlock value. Encouraging an Openreach spin seems most likely. A full takeover (of BT or Openreach) would likely run into political opposition given strategic importance of networks.”

So not by simply offering a few fibre top tips then? At the very least Drahi seems keen to be an activist investor and we saw in Italy, with Vivendi and Elliott, how influential they can be. Altice said it doesn’t intent to attempt a full takeover unless there’s a change of circumstances. As Jeffries notes, that would be tricky to pull off but, as BT’s single biggest shareholder Altice can still heavily influence BT’s direction.