Bike-riding telecoms billionaire becomes BT’s biggest single shareholder
Unveiling BT’s full year results, last month, the company’s chief executive, Philip Jansen, made clear he felt the shares were a long term investment.
For the second consecutive year, he announced an increase in spending in fibre rollout, disappointing some shareholders who would rather have seen BT focusing on returns in the shorter run rather than promising jam tomorrow.
Today, though, came proof that some investors in the broadband and telecoms stalwart are prepared to take a longer view.
BT made clear that Mr Drahi had already spoken with chief executive Philip Jansen Pic: BT
Altice, the second-largest telecoms company in France after Orange (the renamed France Telecom), announced it had snapped up a 12.1% stake in BT worth roughly £2.2bn.
It means Altice – which is owned by France’s ninth-richest man, Patrick Drahi – becomes the biggest single shareholder in BT, overtaking Deutsche Telekom, which has a 12.06% stake as a result of BT’s 2014 acquisition of the mobile operator EE, which was previously part-owned by the German giant.
Shares of BT shot up by 3% at one point to take them to their highest level since January last year.
That was despite an unequivocal statement from Altice that it has no intention of bidding for BT.
It said: “Altice holds the board and management team of BT in high regard and is supportive of their strategy.
“Altice UK has informed the BT board that it does not intend to make a takeover offer for BT.
BT shares climbed to their highest level since January last year
“Altice UK has made this significant investment in BT as it believes that it has a compelling opportunity to deliver one of the UK government’s most important policies, namely the substantial expansion of access to a full-fibre, gigabit-capable broadband network throughout the UK.
“Altice believes that the UK provides a sound environment for substantial long-term investment.
“This is supported by the current regulatory framework, which offers BT the appropriate incentives to make the necessary investments.”
In other words, then, the stake-building appears to be a strong endorsement of and vote of confidence in the long-term approach set out by Mr Jansen who, last month, said cash flow would “go through the roof” once the majority of full fibre rollout had been completed in 2026.
BT responded: “BT Group notes the announcement from Altice of their investment in BT and their statement of support for our management and strategy.
“We welcome all investors who recognise 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 emphasis from Altice that it is a long term shareholder, rather than seeking to make a takeover bid, also reflects a degree of pragmatism.
BT is increasing spending on its fibre roll-out Pic: BT
The UK government has recently bolstered its ability to intervene in takeovers of companies and particularly infrastructure that may be integral to national security.
As the owner of the UK’s largest fixed line and broadband network, Openreach, BT would appear to fall squarely into that category.
It makes it highly likely that the government would intervene were any bidder for BT to emerge.
That is not to say that Altice will not seek to influence what BT does.
Jerry Dellis, equity analyst at the investment bank Jefferies, told clients: “A key issue now is how Altice intends to unlock value.
“Encouraging an Openreach spin [off] seems most likely.
“A full takeover of BT or Openreach would be likely to run into political opposition given the strategic importance of networks.”
And Mr Drahi, the billionaire founder and owner of Altice, is used to getting his own way.
Altice said it does not intend to make a takeover offer for BT
This was emphasised to the outside world when, in June 2019, he swooped to buy Sotheby’s, the world’s most famous auction house, which had looked poised to fall into the hands of the Chinese insurance billionaire Chen Dongsheng.
He has since announced plans to install his 26-year old son, Nathan, as head of Sotheby’s Asia at the end of the year.
Similarly, Mr Drahi pounced in 2014 to buy SFR, France’s second-largest mobile operator, from under the nose of the billionaire industrialist Martin Bouygues.
That business now forms the bulk of Altice Europe, which also owns Portugal Telecom, the country’s largest telecoms operator.
It also owns the second largest telecoms operators in Israel and the Dominican Republic.
Apart from SFR, its other assets in France include BFM TV, the country’s most-watched 24-hour rolling news channel and the radio broadcaster RMC.
Mr Drahi is also adept at pricing telecoms assets.
He bought out minority shareholders in Altice Europe in January this year, at a cost of €3.2bn (£2.7bn), after concluding it was undervalued by the market.
Mr Drahi pounced in 2014 to buy SFR, France’s second-largest mobile operator
He also knows about demergers, having in 2018 spun off Altice’s majority shareholding in Altice USA, the cable and broadband operator, in response to concerns over the parent company’s debt.
What is quite striking about 57-year old Mr Drahi is that, unlike the heads of many of France’s richest business dynasties, he is an entirely self-made man.
Born in Casablanca, Morocco, his parents were maths teachers and he did not move to France until he was 15 years old.
Having studied at one of the country’s top engineering schools, Ecole Polytechnique, he joined the Dutch electronics giant Philips on graduation to work in fibre optics.
It was in this work that he first visited the United States and saw how the cable industry was growing.
On returning to France, he launched his first cable company, Sud Cable Services, using a student loan, the equivalent of the time of around £5,000, as seed capital.
He went on to sell the business to the US cable magnate John Malone four years later, becoming a multi-millionaire in the process, and going on to use the proceeds to set up Altice in 2002 with the intention of using it to consolidate cable and telecoms businesses across Europe.
Mr Malone, himself one of the industry’s most revered figures, has described him as a “genius”.
US cable magnate John Malone has described Mr Drahi as a genius
Mr Drahi has been rumoured to have had his eye on BT for some time now.
The Mail on Sunday reported in August last year that he was eyeing Openreach in particular and had “secured financial backing from heavyweight bankers at JP Morgan with a view to paying £20bn for the unit”.
He is likely to keep his motivation in buying the stake in BT, who made clear today that Mr Drahi had already spoken with Mr Jansen, to himself.
Mr Drahi, who with his wife, Lina, has four children, prefers to take a low-key approach.
With homes in Paris, Geneva, Tel Aviv and the US – he has French, Israeli and Portuguese citizenship – he gives few interviews and has been known in the past to turn up to meetings on foot or on a bicycle rather than, as most executives do, in a chauffeur-driven car.
One thing is clear, though.
Life at BT will be more interesting with him on the shareholder register.
Business
US trade court blocks Donald Trump from imposing sweeping global tariffs – claiming he ‘exceeded his authority’
You probably recall the stories about Leicester’s clothing industry in recent years: grim labour conditions, pay below the minimum wage, “dark factories” serving the fast fashion sector. What is less well known is what happened next. In short, the industry has cratered.
In the wake of the recurrent scandals over “sweatshop” conditions in Leicester, the majority of major brands have now abandoned the city, triggering an implosion in production in the place that once boasted that it “clothed the world”.
And now Leicester faces a further existential double-threat: competition from Chinese companies like Shein and Temu, and the impending arrival of cheap imports from India, following the recent trade deal signed with the UK. Many worry it could spell an end for the city’s fashion business altogether.
Gauging the scale of the recent collapse is challenging because many of the textile and apparel factories in Leicester are small operations that can start up and shut down rapidly, but according to data provided to Sky News by SP&KO, a consultancy founded by fashion sector veterans Kathy O’Driscoll and Simon Platts, the number has fallen from 1,500 in 2017 to just 96 this year. This 94% collapse comes amid growing concerns that British clothes-making more broadly is facing an existential crisis.
A trade fair tries to reignite enthusiasm for the local clothing industry
More on this story:
The modern slaves making our clothes in Leicester
How Leicester’s textile workers are being exploited
Boohoo failed in Leicester supply chain malpractice
In an in-depth investigation carried out over recent months, Sky News has visited sites in the city shut down in the face of a collapse of demand. Thousands of fashion workers are understood to have lost their jobs. Many factories lie empty, their machines gathering dust.
The vast majority of high street and fast fashion brands that once sourced their clothes in Leicester have now shifted their supply chains to North Africa and South Asia.
And a new report from UKFT – Britain’s fashion and textiles lobby group – has found that a staggering 95% of clothes companies have either trimmed or completely eliminated clothes manufacturing in the UK. Some 58% of brands, by turnover, now have an explicit policy not to source clothes from the UK.
Seamstresses in one of the city’s former factories
Clothing industry workers in Leicester
Jenny Holloway, chair of the Apparel & Textile Manufacturers Association, said: “We know of factories that were asked to become a potential supplier [to high street brands], got so far down the line, invested on sampling, invested time and money, policies, and then it’s like: ‘oh, sorry, we can’t use you, because Leicester is embargoed.'”
Tejas Shah, a third-generation manufacturer whose family company Shahtex used to make materials for Marks & Spencer, said: “I’ve spoken to brands in the past who, if I moved my factory 15 miles north into Loughborough, would be happy to work with me. But because I have an LE1, LE4 postcode, they don’t want to work for me.”
Shahtex in Leicester used to make materials for Marks & Spencer
Tejas Shah, of Leicester-based firm Shahtex
Threat of Chinese brands Shein and Temu
That pain has been exacerbated by a new phenomenon: the rise of Chinese fast fashion brands Shein and Temu.
They offer consumers ultra-cheap clothes and goods, made in Chinese factories and flown direct to UK households. And, thanks to a customs loophole known as “de minimis”, those goods don’t even incur tariffs when they arrive in the country.
An online advert for Chinese fast fashion company Shein
According to Satvir Singh, who runs Our Fashion, one of the last remaining knitwear producers in the city, this threat could prove the final straw for Leicester’s garments sector.
“It is having an impact on our production – and I think the whole retail sector, at least for clothing, are feeling that pinch.”
Inside one of the city’s remaining clothesmakers
While Donald Trump has threatened to abolish the loophole in the US, the UK has only announced a review with no timeline.
“If we look at what Trump’s done, he’s just thinking more about his local economy because he can see the long-term effects,” said Mr Singh. “I think [abolishing de minimis exceptions] will make a huge difference. I think ultimately it’s about a level playing field.”
A spokesperson for Temu told Sky News: “We welcome UK manufacturers and businesses to explore a low-cost way to grow with us. By the end of 2025, we expect half our UK sales to come from local sellers and local warehouses.”
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