French billionaire Patrick Drahi buys BT stake worth 2 billion pounds: “King of cost cutting” is now its largest shareholder
Cost reduction: Patrick Drahi (center) celebrates the IPO of his company Altice in New York. He now has a 12.1 percent stake in BT. Bought
The billionaire auction house owner Sotheby’s has acquired a £ 2.2 billion stake in BT, making it the telecommunications giant’s largest investor.
Shares rose after Patrick Drahi announced his 12.1 percent stake and endorsed BT’s £ 15 billion plan to roll out high-speed fiber broadband in the UK.
But the investment, through his company Altice, raised fears that the “King of Cost Cuts” could lead BT’s top talent to cut costs.
Insiders said he was keen to work closely with BT’s management, including CEO Philip Jansen, to help move the company forward – though he told the acquisition board that he had no intentions to buy the company, a release that remains in force for six months.
Drahi said: ‘BT has a significant opportunity to upgrade and expand its full-fiber broadband network to bring significant benefits to millions of households across the UK. We fully support the management’s strategy. ‘
Shares rose 6.6 percent, or 12p, to 195.15p on the news. BT said it welcomes “all investors who see the long-term value of our business.”
The former state monopoly was privatized in the 1980s, but the share price has been falling for the past five years.
BT Sport has not done as well as its rival Sky and the company is in talks to sell the arm.
The service for broadband and telephone customers is also repeatedly criticized.
But investors have discovered an opportunity in BT’s Openreach that charges companies like Sky, Shell, and Talk Talk to piggyback on the network to bring broadband to consumers.
BT stock hit an 11-year low last year but rebounded after regulator Ofcom exempted it from price controls.
His mission to expand broadband was made sweeter by Rishi Sunak’s two-year “super deduction” tax break on investment projects.
BT’s mission to roll out broadband across the UK was also sweetened by Rishi Sunak’s two-year “super withholding tax” on investment projects
BT has announced that it is looking for investors to improve UK broadband and is considering a funding partner.
It is also looking for a new chairman after Jan du Plessis resigned after a fallout in the boardroom.
Drahi, who has French, Israeli, and Portuguese citizenship, is well known in the telecommunications world.
Since the early 2000s when he founded Altice, he has bought companies in Europe and the US. Over the past two decades, he’s grown it into a giant and built a reputation for being a tough cost-reducer.
Unions of the French company SFR even claimed that their members faced a shortage of toilet paper and printer paper after the Altice takeover. In March, SFR announced that it would be able to cut up to 1,700 jobs this year – 11 percent of the workforce.
Altice claims cutting costs now means you can increase your profits and free up money for investments.
In 2019, Drahi bought a 94 percent stake in Sotheby’s for £ 2.6 billion. The art dealer has been criticized for borrowing to fund a dividend of £ 211million to its owners after a similar £ 116million debt aid was made in November.
He was praised for his ingenuity, but suffered a setback in 2017 when Altice’s share price slumped after fears that he would not be able to pay his massive debt.
Altice, which insiders say is “run like a family business,” has dismissed its chairman and brought Drahi back as president.