Bharti Enterprises' international arm to buy Altice UK's BT Group stake worth $4 bn

Bharti said in a statement on Monday that it had no intention of making an offer to acquire the whole of BT, the former state monopoly which is Britain's biggest broadband and mobile company.

Bharti Global, the international investment arm of Bharti Enterprises, on August 12 agreed to purchase a 24.5 percent stake in BT Group Plc from Altice UK, the British telecom firm’s largest shareholder and the investment vehicle of telecom tycoon Patrick Drahi.

This transaction will make Bharti Global the largest shareholder in BT Group. In a move that marks a reversal of roles, Sunil Mittal's Bharti Enterprises is now poised to acquire a significant stake in BT Group. The British telecommunications giant had invested in Bharti Airtel in 1997. The latest acquisition highlights Bharti Group's growing global ambitions and plan to strengthen its presence in the international telecom market.

"It’s a big investment in a storied company in a space that we understand," Bharti Enterprises chairman Mittal told Moneycontrol.

At current market price, a 24.5 per cent stake purchase is valued at Rs 31,850 crore or roughly $4 billion, making it one the biggest outbound deals struck by an Indian company. The market capitalisation of Bharti Airtel is around Rs 8.26 lakh crore currently, much higher than BT Group's Rs 1.39 lakh crore.

The transaction price was near the current market price of BT Group, Reuters reported, citing Mittal. Bharti Enterprises has not asked for a board seat, Mittal added.

Drahi first bought into BT in 2021, but his Altice group has come under mounting pressure to sell assets to cut debts of as much as $60 billion, a pile that allowed him to build his media-to-telecoms empire in an era of low interest rates.

BT's shares have risen by 24 percent in the last six months, as the fruits of its long-term investment plan to build the country's fibre network start to materialise.

“We welcome investors who recognise the long-term value of our business, and this scale of investment from Bharti Global is a great vote of confidence in the future of BT Group and our strategy," said Allison Kirkby, chief executive officer.

"BT has enjoyed a long association with Bharti Enterprises, and I’m pleased that they share our ambition and vision for the future of our business. They have a strong track record of success in the sector, and I look forward to ongoing and positive engagement with them in the months and years to come," Kirkby added.

Reacting to the development, Union commerce minister Piyush Goyal said the deal is "testimony to the growing strength of India".

Reacting to the development, Union commerce minister Piyush Goyal said the deal is "testimony to the growing strength of India".

“I want Indian companies to become multinational. They should have their arms elsewhere too” - PM @NarendraModi ji

With Bharti Enterprises entering into a binding agreement to acquire a 24.5 % strategic stake in the UK’s BT Group, the wheel has come full circle since 1997 when…

— Piyush Goyal (@PiyushGoyal) August 12, 2024

Bharti Enterprises also owns Bharti Airtel, India's second-largest telecom operator with operations in Africa.

Bharti Enterprises said it would acquire an initial 9.99 percent stake before seeking to acquire the remaining 14.51 percent following regulatory approvals, including voluntarily applying for clearance under the UK National Security and Investment Act.

Moreover, Bharti also said that it had no intention of making an offer to acquire the whole of BT, the former state monopoly of Britain's biggest broadband and mobile company.

"This investment demonstrates the confidence we have in BT and in the UK," Mittal said in a statement.

Timotheus Höttges, chief executive of Deutsche Telecom, which owns 12 percent of BT Group, described Bharti Global’s stake purchase as a “positive step for BT”.

“We have a long and good working relationship with Bharti. So we are looking forward to working together with Bharti and the Board of Directors for the sake of BT shareholders and customers,” Höttges said.

According to the Mittal-led group, this investment will further help create "new synergies in the telecom sector between both countries in the areas of AI and 5G R&D and core engineering amongst others".

“We review global investment opportunities in the world of technology from digital infrastructure to software. BT is well known to us from the long association with Bharti, so we are pleased to have this opportunity to acquire a significant stake in the company," said Shravin Bharti Mittal, managing director of Bharti Global.