(Bloomberg) — The UK will review French telecom tycoon Patrick Drahi’s increased stake in BT Group Plc after Business Secretary Kwasi Kwarteng exercised new takeover powers focusing on national security.
Drahi’s investment vehicle Altice UK increased its stake in the former state-owned telecommunications monopoly from 12.1% to 18% in December. He’s now BT’s largest shareholder and the investment has raised concerns in government, BT said Thursday.
BT is the biggest owner of Britain’s internet backbone through fiber infrastructure company Openreach, as well as mobile network EE. It also runs important connectivity and service contracts across government and business.
Drahi’s interest in the company fueled speculation since he revealed his initial stake last June, sparking concerns about a takeover attempt, or so-called creeping control. The billionaire previously said he doesn’t intend to make an imminent takeover bid, triggering six-month standstills under British takeover law. The second of those expires in June.
BT shares fell 5.5% to 179.55 pence at 8:19 a.m. in London.
“Some investors are involved in BT because of the stake-building and arguably the government has indicated it’s somewhat concerned about that,” Deutsche Bank analyst Robert Grindle said by phone.
Whether ministers intervene or not after this review, it shows that any further move on BT, valued at about £18 billion ($22.6 billion), would face intense political scrutiny and hurdles.
It’s the second roll-out in 24 hours of the new National Security and Investment Act, which came into force Jan. 4, after Kwarteng referred a Chinese-led takeover of a British semiconductor firm for an in-depth probe on Wednesday.
The Department for Business, Energy and Industrial Strategy didn’t immediately respond to a request for comment for further detail about why the probe had been triggered, and a spokesman for Altice did not immediately respond to a request for comment.
In 2020 BT found itself at the heart of another national security debate, about the role played by Chinese telecommunications vendor Huawei Technologies Co., which was supplying a large portion of the carrier’s 5G wireless network before it was banned by Prime Minister Boris Johnson amid a wider crackdown led by former US President Donald Trump.
Since then, British ministers have toughened rules on foreign investment. Officials now have 30 working days to carry out an assessment, under the law — though they can extend that by another 45 days if deemed necessary.
“BT is one of the jewels in the crown of UK R&D and tech innovation, so it is right that the government is taking an active role in scrutinizing its future,” Mike Clancy, general secretary of BT union Prospect, said in an email. The government must ensure that jobs are protected, he added.
(Updates with shares, analysts from 5th paragraph)
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