Germans back ‘sleeping giant’ BT as mounting debt hits shares

One of BT’s biggest shareholders throws its weight behind embattled telecoms operator after shares slumped over summer








One of BT’s biggest shareholders has thrown its weight behind the embattled telecoms operator after its shares slumped over the summer. 

German firm Deutsche Telekom – which owns 12 per cent of the former UK state monopoly – backed BT chief Philip Jansen and his plan to bring full-fibre broadband to up to 25million homes by late 2026. 

BT shares have fallen from more than £2 in June to £1.58 after the company revealed lower-than-expected revenues and said it was taking on more debt to fund the rollout of super-fast 5G internet. 

Tough times: BT shares have fallen from more than £2 in June to £1.58 after the company revealed lower-than-expected revenues

But Deutsche Telekom chief Timotheus Hottges said: ‘We believe BT has solved a lot of issues going forward when it comes to the fibre roll-out and Ofcom relations, solved most of their pensions now, and have a clear path in the market. 

‘They are solving one problem after another. This will definitely help the company succeed. We see value in that company.’ 

BT’s shares shot up earlier this year when Altice – a telecoms firm owned by Franco-Israeli tycoon Patrick Drahi – took a 12.1 per cent stake. 

They slipped back after City analysts voiced fears around BT’s trading update in July. Drahi is seen as a potential buyer for the stake held by Deutsche Telekom, which kept its BT holding after the £12.5billion takeover of EE in 2016. 

His arrival stoked rumours he may push for a shake-up at BT, possibly forcing a sale of all or part of its Openreach infrastructure arm. 

It has also been suggested he could move to buy BT, although politicians may try to block any deal and he has committed to City takeover rules preventing him from making a bid until December when new chairman Adam Crozier takes over. 

But at the Goldman Sachs Communacopia conference, also attended by Jansen, Hottges said of its BT stake: ‘We are not a seller at this point in time. That is very clear.’ Jefferies analyst Jerry Dellis said the statement sounded ‘particularly confident’ in the face of expansion by rival Virgin Media O2. 

Virgin has laid out plans to bring full-fibre broadband to 15.5million premises by 2028 after merging with O2. 

Deutsche Telekom wrote down €3.3billion on investment in BT and has moved the stake into its pension fund. Its stake is estimated to have lost €9.1billion in value. 

Drahi has seen the value of his stake fall by £300million. Sources said his next move could be determined by the outcome of a sale of Altice’s €6billion Portuguese arm. 

Bankers at Lazard have sounded out prospective bidders for his Portuguese division including Spain’s MasMovil. 

Sotheby’s owner Drahi has earned a fearsome reputation after heavy cost cuts at operations in Portugal and France, where even toilet paper was rationed. 

One telecoms executive said: ‘BT is a sleeping giant. If Patrick wants to buy more it probably depends on selling the Portuguese business at a good price.’ 

Separately, Sir Leonard Blavatnik’s DAZN is in advanced talks to buy BT’s TV sport business.

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