New Delhi, Aug 12 (PTI) Telecom czar Sunil Bharti Mittal’s conglomerate will buy a 24.5 per cent stake in BT Group for about USD 4 billion to become the single largest shareholder in Britain’s biggest broadband and mobile company.
Bharti Global, the international investment arm of Bharti Enterprises, will buy a 9.99 per cent stake in BT Group from Patrick Drahi’s Altice immediately and purchase the remainder after it secures the necessary regulatory approvals, the firm said in a statement.
It, however, did not disclose financial details but market watchers say that at BT’s valuation of roughly USD 15 billion, the deal is in the ballpark range of USD 4 billion.
Bharti Enterprises Chairman Sunil Bharti Mittal said BT Group’s leadership position and strong portfolio of offerings spanning broadband, fibre, mobile and enterprise space marked a “good, long-term investment” opportunity for Bharti Group, and expressed confidence in the “iconic” British telecom giant’s strong growth prospects and free cash flow potential for the future.
“We got this opportunity to buy a very important block of shares. It is very difficult and hard to buy such stock in the market. It takes a long period of time and there are uncertainties of pricing… here was a block with a willing seller (Altice UK) who moved in to make this offer and we quickly decided to take the same,” Mittal told reporters.
Bharti, India’s second-largest telecom operator with about 400 million subscribers, has had a relationship with BT previously as well. BT owned a 21 per cent stake in Bharti Airtel from 1997 to 2001.
Bharti is neither keen on making an offer to acquire the whole of BT nor seeking a board position for now.
Altice, an investment conglomerate controlled by billionaire Drahi, is exiting BT as it struggles with high debt. It first took a stake in BT in 2021, acquiring a 12 per cent holding, which it later increased to 24.5 per cent.
BT’s shares have fallen by about a third since Altice first became an investor.
“Bharti Global, the international investment arm of Bharti Enterprises, a leading Indian business group with world-class companies in telecoms, digital infrastructure and space communications, has reached an agreement to acquire an interest in 24.5 per cent of the issued share capital of BT Group plc from Altice UK,” Bharti said in a statement.
Bharti hopes the investment will further help create new synergies in the telecom sector between India and the UK in the areas of AI and 5G R&D and core engineering, among others, “offering great potential to collaborate on industry best practices and emerging technologies”.
Mittal, the top boss of Bharti, said: “Bharti and British Telecom (BT) have an enduring relationship going back more than two decades wherein BT owned a 21 per cent stake along with two board seats in Bharti Airtel Limited from 1997-2001. Today marks a significant milestone in Bharti Group’s history as we invest in BT – an iconic British company”.
Bharti’s investment in BT aims to support the commitment of Prime Minister Narendra Modi towards his vision of elevating and broadening the India-UK ties, the release said.
It noted that during the recently concluded visit of UK Foreign Secretary David Lammy to India, the UK-India Technology Security Initiative was announced to expand collaboration in critical and emerging technologies across priority sectors, including telecom.
Mittal said: “This investment in BT aims to support the commitment of our Prime Minister towards his vision in elevating and broadening the India-UK ties”.
His son Shravin Bharti Mittal, who is the Managing Director of Bharti Global, said: “We review global investment opportunities in the world of technology from digital infrastructure to software. BT is well known to us from the long association with Bharti, so we are pleased to have this opportunity to acquire a significant stake in the company”.
In an interaction with reporters, he highlighted that BT’s investment was “exciting” for many reasons.
“It has a perfect combination of a stable cash flow profile from its consumer business…BT’s business and growth coming through ‘Openreach’…our expectation is that there is enough clarity that the management is delivering, there is clarity of vision and clarity on execution, and it is the right time to enter as an investor in BT,” he said.
“Our belief is that in the coming years, we will see a significant expansion of the cash flow profile and the timing was rightly suited for us at the international arm for this investment.” Meanwhile, BT Group, in a separate statement, said the investment from Bharti is a strong vote of confidence in the future of the British telecom carrier and its strategy.
BT Chief Executive Allison Kirkby said: “We welcome investors, who recognise the long-term value of our business, and this scale of investment from Bharti Global is a great vote of confidence in the future of BT Group and our strategy”.
Barclays Bank PLC, acting through its Investment Bank, served as the sole financial advisor and Linklaters LLP served as legal advisor to Bharti Global in connection with the transaction.
“Barclays has been the financial advisor for these transactions. They will provide some immediate cash so there will be a mix of equity and some financial support coming from Barclays…,” according to Sunil Mittal.
Timotheus Hottges, CEO of Deutsche Telecom (which holds a 12 per cent stake in BT), termed the latest announcement as a positive step for BT.
“We have a long and good working relationship with Bharti. So, we are looking forward to working together with Bharti on the Board of Directors for the sake of BT shareholders and customers,” Hottges said.
Union Minister Piyush Goyal, in a post on X, said: “With Bharti Enterprises entering into a binding agreement to acquire a 24.5 per cent strategic stake in the UK’s BT Group, the wheel has come full circle since 1997 when British Telecom acquired a 21 per cent stake in Bharti Airtel”. PTI MBI MBI BAL BAL
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