Drahi is no threat to national security
The UK government has said it is taking no action over French group Altice increasing its stake in BT Group to 18%, on the ground that it is not a threat to national security. However, one leading telecoms analyst has warned this is not the end of the story.
Paolo Pescatore, tech, media and telco analyst for PP Foresight, described this as a situation that: “all key stakeholders including the UK government [must] continue monitoring very closely!”
In May, Business Secretary Kwarteng used his call-in power under section 1 of the National Security and Investment Act 2021 to look at the rise in Altice stakeholding. Section 1 of the Security Act allows the government to take action where it considers there is a threat to the UK.
Yesterday the acquisition of BT shares by French billionaire Patrick Drahi’s Altice was cleared by the business secretary after a review under the act. Drahi’s company is now set to increase its BT stake from 12% to 18%, after announcing the decision in December.
In a statement in May, BT said that Kwarteng was exercising his “call-in power” under the NSIA, which was brought into effect at the beginning of this year, to review the investment.
The French billionaire owns auction house Sotheby’s and also owns Israeli cable television company HOT and has built stakes in multiple American and British telecoms companies. When Drahi bought the first 12.1% stake, it was worth £2.2bn and made him the largest shareholder in the flagship British telco. However, it was when the French group proposed to increase its stake in BT to 18%, in December 2021, that it questions of the UK national interest were raised. In December it was was rumoured that Kwarteng might take steps to block the move.
“The government will always act to protect the UK’s critical national telecoms infrastructure if we judge action is necessary,” said a government statement today. “Under the National Security and Investment Act, acquisitions are assessed on a case by case basis, so any future transaction could be subject to a separate assessment under the Act.
Drahi has consistently stated that he is not interested in taking over BT and is supportive of management strategy, especially in regard to its full-fibre broadband roll-out. However PP Foresight analyst Pescatore predicted there is more to come. “While [Drahi] is not forced to reduce his stake, you cannot rule out moves to increase it further,” said Pescatore, “[it] feels like the end game seems to be a takeover.”