Connect with us

Published

on

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.

Philip Jansen Group CEO Pic: BT
Image:
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.

More from Business

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 two-year share price chart 10/6/2021
Image:
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 engineers installing broaband
Image:
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.

The logo of cable and mobile telecoms company Altice Group is seen during a news conference in Paris, France, March 21, 2017
Image:
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.

Logos of French telecoms operator SFR are pictured on a shop in Niort, France, March 4, 2021.
Image:
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”.

Liberty Media Corp. chairman John Malone arrives at the annual Allen and Co. conference at the Sun Valley, Idaho Resort July 12, 2013.
Image:
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.

Continue Reading

Business

UBS takeover of Credit Suisse: Embattled bank’s chairman describes ‘historic, sad and very challenging’ day

Published

on

By

UBS takeover of Credit Suisse: Embattled bank's chairman describes 'historic, sad and very challenging' day

UBS will take over Credit Suisse in a deal aimed at stemming what was fast becoming a global crisis of confidence.

Credit Suisse, the 167-year-old embattled lender had been brought to the brink of financial calamity last week, despite securing a $54bn (£44bn) credit line from Switzerland’s central bank.

The credit line was agreed upon in a move aimed at reassuring markets and depositors, but it failed to stem a rush of customer withdrawal, prompting a request from the Swiss government for the rival UBS to consider a takeover.

That takeover was announced on Sunday evening – UBS will pay 3bn Swiss francs (£2.6bn) to acquire Credit Suisse, it has agreed to assume up to 5bn francs (£4.4bn) in losses, and 100bn Swiss francs (£88.5bn) in liquidity assistance will be available to both banks.

The deal is expected to be closed by the end of this year.

Colm Kelleher, chairman of UBS Group, said the agreement “represents enormous opportunities”.

He also said that his bank’s long-term aim would be to downsize Credit Suisse’s investment banking business and align it with the “conservative risk culture” of UBS.

More from Business

Axel Lehmann, chairman of Credit Suisse, described the day as “historic, sad and very challenging” for his bank and the global market.

‘The best available outcome’

Mr Lehmann said: “Given recent extraordinary and unprecedented circumstances, the announced merger represents the best available outcome.

“This has been an extremely challenging time for Credit Suisse and while the team has worked tirelessly to address many significant legacy issues and execute on its new strategy, we are forced to reach a solution today that provides a durable outcome.”

‘Exceptional situation’

In a statement, the Swiss central bank and other officials said that the agreement represented “a solution…to secure financial stability and protect the Swiss economy in this exceptional situation”.

It is also hoped that UBS’s takeover of its old rival will avoid the contagion of the kind seen in the financial crisis of 2008.

This is a significant deal but huge risks continue to lurk in the global financial system

This combination brings together not only Switzerland’s two biggest banks but two of the most significant financial institutions in the world.

There was reference during the press conference to discussions with Jeremy Hunt, the British chancellor.

That underlines the crucial nature of this deal as governments and financial regulators around the world race to contain the banking sector’s biggest crisis of the last 15 years.

This was always a deal that the Swiss government had resisted. It had been speculated so many times over the last decade, but the Swiss government had always wanted to maintain two national banking champions.

But let’s be clear – all the parties involved in this deal have effectively been strong-armed into it by the crisis of confidence which has erupted at Credit Suisse, and which has been fomenting for some time.

UBS has been effectively strong-armed into doing this deal by the Swiss government, and Credit Suisse has been forced to accept it – there won’t be a shareholder vote on the transaction.

The only alternative to this deal happening was going to be when financial markets opened on Monday in Asia and then in Europe, some form of nationalisation or resolution of Credit Suisse which would have deepened the sense of crisis in the industry.

This government-orchestrated rescue does avert the collapse of a major global bank but while it might be tempting to believe this draws a line under this banking crisis, remember that a week ago HSBC stepped in to buy the British arm of Silicon Valley Bank for £1 after its American parent collapsed, and a number of other mid-sized US banks have been forced to seek emergency support in the last 10 days.

All of this is a sobering reminder that as interest rates risk sharply to combat global inflationary pressures, huge risks continue to lurk in the global financial system.

Central banks insist systems are resilient

The news was welcomed by central banks in the US, Europe and in the UK.

All three insisted that banking systems within their jurisdiction are strong and resilient.

The Bank of England said: “We have been engaging closely with international counterparts throughout the preparations for today’s announcements and will continue to support their implementation.

“The UK banking system is well capitalised and funded, and remains safe and sound.”

Please use Chrome browser for a more accessible video player

Credit Suisse rescue: What now for the UK’s banks?

A deal likely to ripple through global markets

Credit Suisse is one of the world’s largest wealth managers and is also one of 30 banks ranked as systemically important, meaning the deal is likely to ripple through global markets on Monday.

It is also one of the largest investment banking employers in the City of London, employing around 5,000 people.

In a memo to employees on Sunday, Credit Suisse said there would be no immediate impact on clients or day-to-day working operations, adding that branches and global offices would remain open.

It comes after a difficult few weeks for the banking sector, with the collapse of US lenders Silicon Valley Bank and Signature Bank.

The UK branch of SVB was rescued by HSBC for £1, but a number of other mid-sized American lenders have also been forced to seek emergency funding.

Continue Reading

Business

UBS to take over Credit Suisse, Swiss central bank confirms

Published

on

By

UBS takeover of Credit Suisse: Embattled bank's chairman describes 'historic, sad and very challenging' day

UBS will take over Credit Suisse in a deal aimed at stemming what was fast becoming a global crisis of confidence.

Credit Suisse, the 167-year-old embattled lender had been brought to the brink of financial calamity last week, despite securing a $54bn (£44bn) credit line from Switzerland’s central bank.

The credit line was agreed in a move aimed at reassuring markets and depositors, but it failed to stem a rush of customer withdrawal, prompting a request from the Swiss government for the rival UBS to consider a takeover.

That takeover was announced on Sunday evening – UBS will pay 3bn Swiss francs (£2.6bn) to acquire Credit Suisse, it has agreed to assume up to 5bn francs (£4.4bn) in losses, and 100bn Swiss francs (£88.5bn) in liquidity assistance will be available to both banks.

The deal is expected to be closed by the end of this year.

Colm Kelleher, chairman of UBS Group, said the agreement “represents enormous opportunities”.

He also said that his bank’s long-term aim would be to downsize Credit Suisse’s investment banking business and align it with the “conservative risk culture” of UBS.

More from Business

Axel Lehmann, chairman of Credit Suisse, described the day as “historic, sad and very challenging” for his bank and the global market.

‘The best available outcome’

Mr Lehmann said: “Given recent extraordinary and unprecedented circumstances, the announced merger represents the best available outcome.

“This has been an extremely challenging time for Credit Suisse and while the team has worked tirelessly to address many significant legacy issues and execute on its new strategy, we are forced to reach a solution today that provides a durable outcome.”

‘Exceptional situation’

In a statement, the Swiss central bank and other officials said that the agreement represented “a solution…to secure financial stability and protect the Swiss economy in this exceptional situation”.

It is also hoped that UBS’s takeover of its old rival will avoid the contagion of the kind seen in the financial crisis of 2008.

This is a significant deal but huge risks continue to lurk in the global financial system

This combination brings together not only Switzerland’s two biggest banks but two of the most significant financial institutions in the world.

There was reference during the press conference to discussions with Jeremy Hunt, the British chancellor.

That underlines the crucial nature of this deal as governments and financial regulators around the world race to contain the banking sector’s biggest crisis of the last 15 years.

This was always a deal that the Swiss government had resisted. It had been speculated so many times over the last decade, but the Swiss government had always wanted to maintain two national banking champions.

But let’s be clear – all the parties involved in this deal have effectively been strong-armed into it by the crisis of confidence which has erupted at Credit Suisse, and which has been fomenting for some time.

UBS has been effectively strong-armed into doing this deal by the Swiss government, and Credit Suisse has been forced to accept it – there won’t be a shareholder vote on the transaction.

The only alternative to this deal happening was going to be when financial markets opened on Monday in Asia and then in Europe, some form of nationalisation or resolution of Credit Suisse which would have deepened the sense of crisis in the industry.

This government-orchestrated rescue does avert the collapse of a major global bank but while it might be tempting to believe this draws a line under this banking crisis, remember that a week ago HSBC stepped in to buy the British arm of Silicon Valley Bank for £1 after its American parent collapsed, and a number of other mid-sized US banks have been forced to seek emergency support in the last 10 days.

All of this is a sobering reminder that as interest rates risk sharply to combat global inflationary pressures, huge risks continue to lurk in the global financial system.

Central banks insist systems are resilient

The news was welcomed by central banks in the US, Europe and in the UK.

All three insisted that banking systems within their jurisdiction are strong and resilient.

The Bank of England said: “We have been engaging closely with international counterparts throughout the preparations for today’s announcements and will continue to support their implementation.

“The UK banking system is well capitalised and funded, and remains safe and sound.”

Please use Chrome browser for a more accessible video player

Credit Suisse rescue: What now for the UK’s banks?

A deal likely to ripple through global markets

Credit Suisse is one of the world’s largest wealth managers and is also one of 30 banks ranked as systemically important, meaning the deal is likely to ripple through global markets on Monday.

It is also one of the largest investment banking employers in the City of London, employing around 5,000 people.

In a memo to employees on Sunday, Credit Suisse said there would be no immediate impact on clients or day-to-day working operations, adding that branches and global offices would remain open.

It comes after a difficult few weeks for the banking sector, with the collapse of US lenders Silicon Valley Bank and Signature Bank.

The UK branch of SVB was rescued by HSBC for £1, but a number of other mid-sized American lenders have also been forced to seek emergency funding.

Continue Reading

Business

John Lewis may end 100% staff ownership to raise investment for ‘transformation’ as job losses loom

Published

on

By

John Lewis may end 100% staff ownership to raise investment for 'transformation' as job losses loom

The retail giant John Lewis may dilute its 100% employee ownership to raise fresh investment.

The change to the partnership model would signal a major departure for the company, which runs the department store chain and Waitrose supermarkets.

The firm warned of job cuts and told staff it will not hand out a bonus for only the second time since 1953 this week after posting an annual loss of £234m as costs soared and sales dipped.

Dame Sharon White, its chairwoman, is in the early stages of exploring a plan to change its mutual structure in an attempt to raise up to £2bn of new investment, according to The Sunday Times.

The group would consider selling only a minority stake and its priority would be to maintain majority employee ownership, the newspaper said.

Any move would have to be voted on by the retailer’s partnership council of about 60 staff.

In the face of tough trading conditions, the firm has been looking to diversify its operations, including a move into the “build to rent” property business.

More on John Lewis

At the end of last year it signed a £500m deal with Abrdn, a global investment company, that will help it build 1,000 new homes.

The John Lewis Partnership said: “We’ve always said we would seek partnerships to help fund our transformation and exciting growth plans.

“We’ve done this with Ocado in the past and now with Abrdn.

“Our partners, who own the business, will be the first to hear about any developments.”

Image:
The business includes 329 Waitrose shops

UK’s largest employee-owned business

The business was founded by John Lewis with a small shop on Oxford Street in 1864.

His son, John Spedan Lewis, created the partnership more than 70 years ago as an experiment into a better way of doing business by including staff in decision-making.

The John Lewis Partnership is the UK’s biggest employee-owned business with around 74,000 staff, known as partners.

The group has 34 John Lewis shops and 329 Waitrose shops, along with its retail websites.

In a letter sent to staff last week, Dame Sharon raised the spectre of job losses as part of efforts “to become more efficient and productive”.

Click to subscribe to The Ian King Business Podcast wherever you get your podcasts

‘Inflationary pressures’

A loss of £78m was recorded for the financial year which ended in January but when exceptional costs were added this reached £234m.

These included the write-down in value of Waitrose stores.

It represented a slump from a £181m profit in the previous year, with John Lewis blaming “inflationary pressures”.

The update came a day after the group appointed turnaround specialist Nish Kankiwala as its first chief executive, in a shake-up of the leadership structure.

Continue Reading

Trending