Bike-riding telecoms billionaire becomes BT’s biggest single shareholder

Published

3 years ago

June 10, 2021

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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.

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.

“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.

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.

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.

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”.

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

National debt to triple due to climate change and sick population – OBR

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5 hours ago

September 12, 2024

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National debt to triple due to climate change and sick population - OBR

The gap between how much money the state takes in and its spending will triple in the next 50 years, according to independent forecasters.

Public debt will rise due to an ageing and ill population as well as climate change, the fiscal watchdog the Office for Budget Responsibility (OBR) has said.

The ratio between debt and everything produced in the economy as measured by gross domestic product (GDP) will reach 270%.

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Latest figures show debt is nearly 100% of GDP.

Why?

The effects of climate change are estimated to damage the economy and public finances by adding between sums equivalent to 20% and 30% of GDP to the debt pile.

But there could be an improvement in the estimates by making everyone healthier, the OBR said.

Improved population health could reduce national debt expectations by more than 40% by the mid-2070s.

As the population gets older fewer people are paying tax and more needs to be spent on health and care services, costing the state and raising debt levels.

It’s been described by the body as “unsustainable”.

As the combustion engine is phased out and motorists turn to electric vehicles revenue will be lost from fuel duty, cutting a key source of state revenue.

A carbon tax does not replace lost motoring taxes as fuel duty declines, the OBR’s report said.

What’s the OBR?

The office was established to crunch the public finance numbers, provide forecasts and analyse government budgets.

Its assessment of the long-term fiscal risks facing the economy was published on Thursday – a report which is typically published in July but was moved due to the UK general election.

The same warning was also made when last year’s report was issued.

Reaction

In response, the chief secretary to the Treasury said: “The OBR has laid bare the shocking state that our public finances were left in by the previous government.

“That’s why this government began work immediately to address the inheritance with tough choices on spending alongside ambitious action to drive growth. By fixing the foundations, we will rebuild Britain and make every part of the country better off.”

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Tesco loses Supreme Court ‘fire and rehire’ fight

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5 hours ago

September 12, 2024

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Tesco loses Supreme Court 'fire and rehire' fight

Tesco says it will accept a Supreme Court ruling in a so-called ‘fire and rehire’ case amid government efforts to bolster workers’ rights.

The Union of Shop Distributive and Allied Workers (Usdaw), along with three of its members at Tesco who also represent the union, took legal action over proposals in 2021 to fire staff at some distribution centres and rehire them on lower pay.

The case, which originally involved more than 360 workers – the majority at Livingston in West Lothian – arose after the supermarket chain offered staff higher “retained pay” to relocate in 2007.

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In 2021, the UK’s largest retailer announced plans to bring retained pay to an end and said that those affected would receive a lump sum instead.

If the offer was not accepted, the company said their contracts would be terminated and then reoffered on the same terms, but without the increased salary.

Usdaw argued that “retained” pay was described as “permanent” in the staff’s contracts, meaning it could not be removed, while Tesco said bosses were using a legitimate “contractual mechanism” open to employers.

The Supreme Court judgment followed earlier court wins for both parties – latterly Tesco at the Court of Appeal.

The five Supreme Court justices ruled unanimously that Tesco should be blocked from dismissing the staff.

They said: “Objectively, it is inconceivable that the mutual intention of the parties was that Tesco would retain a unilateral right to terminate the contracts of employees in order to bring retained pay to an end whenever it suited Tesco’s business purposes to do so.

“This would have been viewed, objectively, as unrealistic and as flouting industrial common sense by both sides.

“It would have been open to Tesco to negotiate a longstop date for the entitlement to retained pay or to make clear that the retained pay could be withdrawn if an employee were dismissed with notice and then re-employed in the same role. Neither was done.”

Following the ruling, Paddy Lillis, Usdaw’s general secretary, said: “These sorts of tactics have no place in industrial relations, so we felt we had to act to protect those concerned.

“We were very disappointed with the outcome in the Court of Appeal but always felt we had to see this case through.

“We are therefore delighted to get this outcome, which is a win for the trade union movement as a whole.”

The government has previously outlined plans to ban “fire and rehire” policies and exploitative zero-hours contracts, as well as enforce more rights from a worker’s first day in a job, including sick pay.

A Tesco spokesperson said: “We accept the Supreme Court’s judgment. Our colleagues in our distribution centres play a really critical role in helping us to serve our customers and we value all their hard work.

“Our objective in this has always been to ensure fairness across all our DC colleagues. Today’s judgment relates to a contractual dispute brought on behalf of a very small number of colleagues in our UK distribution network who receive a supplement to their pay.

“This supplement was offered many years ago as an incentive to retain certain colleagues and the vast majority of our distribution colleagues today do not receive this top-up.

“In 2021, we took the decision to phase it out. We made a competitive offer to affected colleagues at that time and many of them chose to accept this.

“Our aim has always been to engage constructively with Usdaw and the small number of colleagues affected.”

A Department for Business and Trade spokesperson added: “We are committed to updating Britain’s employment protections so they are fit for our modern economy and the future of work.

“We will be bringing forward legislation soon to put an end to unscrupulous fire and rehire practices, which have no place in a modern labour market.”

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Ryanair boss Michael O’Leary ‘happy’ to introduce two-drink booze limit on flights

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5 hours ago

September 12, 2024

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Ryanair boss Michael O'Leary 'happy' to introduce two-drink booze limit on flights

Ryanair boss Michael O’Leary has said he is prepared to introduce a two-drink limit on his planes – if the same rule is applied to airport bars.

His call for alcohol restrictions comes after a “spike” in violent disorder among passengers over the summer.

Mr O’Leary told Sky News last month that Ibiza was one of the worst-affected destinations.

On Sunday, a Ryanair flight from Manchester to Ibiza was diverted to Toulouse in France after a group of passengers became disruptive.

Asked by Sky News if he would restrict passengers to two alcoholic drinks, Mr O’Leary said he would be “happy to do it tomorrow”.

He added: “If the price of putting a drink limit on the airport, where the problem is being created, is putting a drink limit on board the aircraft, we’ve no problem with that.

“The real issue is how do we stop these people getting drunk at airports particularly as, like this summer, we’ve had a huge spike in air traffic control delays.

“They’re getting on board with too much alcohol in their system. If we identify them as being drunk on board, we don’t serve them alcohol. But that doesn’t solve the problem.”

The Ryanair’s boss was speaking ahead of the company’s annual meeting in Dublin, where he told shareholders passenger traffic was on target to grow by 8% to 200 million this year.

Mr O’Leary also repeated his call for Martin Rolfe, the boss of Nats – the air traffic controller firm for many of the UK’s biggest airports – to be sacked over chaos at Gatwick Airport last summer.

“He’s demonstrated over a number of years that he’s incompetent,” Mr O’Leary claimed.

“It keeps breaking down as recently as last week, short-staffed at Gatwick. The Gatwick airlines had to cancel about 60 flights on Sunday.

“These repeatedly happen every summer. It’s not acceptable that someone who keeps delivering failure stays in his job. He should be dismissed.”

Nats said last year that the problems at Gatwick Airport had been caused by “an extremely rare set of circumstances” involving its technical infrastructure.

Mr Rolfe also apologised and said the organisation had “put measures in place to ensure it does not happen again”. He described Ryanair’s approach surrounding the issue as “abrasive” in a letter to a parliamentary committee.

Meanwhile, Mr O’Leary also discussed the UK’s political outlook after previously saying Sir Keir Starmer “couldn’t be any worse” than the Conservatives.

He said on Thursday: “He’s getting his feet under the desk, it’s early days yet, but at least he has a big majority and you don’t have the kind of Tory psycho-drama going on”.

“Thankfully most of the Brexiteers have now lost their seats and are out in the wilderness,” he added.

Mr O’Leary also claimed that Brexit had done “untold damage to the UK economy” and called for closer UK alignment with EU rules.

He added: “It’s good for the UK and it’s good for Europe. I don’t think anybody wants the UK back in the EU, but Europe is still the UK’s biggest market, by some considerable distance.

“The Brexiteers have failed to deliver any of the trade agreements they promised at the time of Brexit… Most of them have left the stage despite being in charge when they delivered their shambolic hard-deal Brexit.”

A spokesperson for Nats told Sky News: “We are very sorry for Sunday’s disruption which was also disappointing for our highly professional Gatwick team, who are doing all they can to provide a seamless 24/7 service.”

They added: “This summer, since April, we have managed more than 124,000 flights at Gatwick, 2.7% up on last year and our service has been fully available over 99% of the time, 24 hours per day, every day.   

“Any cancellation is one too many. On the rare occasions when we have had to reduce the flow of traffic at Gatwick, we have done everything possible to minimise disruption.”