BT says UK government to take no further action over Altice stake

BT has said the UK government will not use its new national security powers to block or unwind French group Altice’s stake in the former British telecoms monopoly.

The UK government this year examined the security implications of the 18 per cent holding by Altice, the investment vehicle controlled by billionaire Patrick Drahi. Altice had increased its BT stake from 12 per cent in December.

The UK decided “no further action is to be taken under the Act in relation to the increase” in Altice’s shareholding, BT said on Tuesday.

Speculation about Mr Drahi’s intentions has intensified since he first spent £2 billion (€2.37 billion) on a stake in June last year, given that he has made debt-fuelled buyouts of companies in France, Portugal and the US in the past.

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People close to the telecoms group have said Mr Drahi is supportive of its long-term strategy, particularly its rapid investment in the rollout of full fibre infrastructure, and they did not believe he was angling for full control.

Now that the review has finished, and no remedies were taken, it is possible Mr Drahi will seek to increase his stake again, though this could trigger another assessment. Altice declined to comment.

BT’s share price rose 2.5 per cent in early morning trading on Tuesday to 160p (€1.90), although it has shed more than 7 per cent so far this year.

The National Security and Investment Act, which came into force last year, gives the secretary of state the power to call in transactions they “reasonably suspect give rise to or may give rise to a risk to national security”, according to a business department document. If deemed “necessary and proportionate”, the business secretary is then able to “impose certain conditions, block or unwind it completely”.

Earlier this year, the UK’s business secretary Kwasi Kwarteng said he was examining the takeover of Newport Wafer Fab in Wales by Nexperia, a Dutch subsidiary of Chinese company Wingtech.

Last week, Mr Kwarteng used the law to block the takeover of Pulsic, an electronics design company, by a Chinese group called Super Orange HK, stating that the company’s intellectual property and software “could be used to build defence or technological capabilities”.

In the first three months of using its new powers, from January to March of this year, the British government received 222 notifications about transactions that might need to be reviewed on national security grounds, 17 of which were called in for a formal review.

However, the UK government has come under criticism for the broad remit of its new powers, with some lawyers and investors fearing that they could be used to further Britain’s national interest rather than its national security.

– Copyright The Financial Times Limited 2022