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BT shares jump after Altice sells 24.5% stake in FTSE 100 giant to Bharti 

BT shares jump after Altice sells 24.5% stake in FTSE 100 giant to Bharti

What’s going on here?

BT's share jumped 6.4% after the market opened this morning after it emerged that its largest shareholder, Altice, had agreed to sell its stake in the business.

The FTSE 100 giant’s largest shareholder agreed to sell its 24.5% telecom company stake to Indian conglomerate Bharti.

Bharti said that it would also apply for clearance under the UK National Security and Investment Act.

Who are Altice and Bharti?

Altice is a French multinational telecommunications and mass media company with an official HQ in the Netherlands.

Altice USE is one of the largest broadband communication and video services providers in the US, delivering broadband, video, mobile, proprietary content and advertising services to nearly 5 million residential and business customers across 21 states through its Optimum brand.

Bharti Enterprises initially started manufacturing bicycles before diversifying into other sectors. It entered into the telecommunications industry in 1995.

Why is this happening?

Altice has struggled with rising debts in recent years and has sold the stake it built in 2021 to Bharti.

Altice has taken out several; loans to build their position in BT Group. Indebted French telecoms group Altice took out a £1.5bn margin loan against its stake in FTSE 100 giant BT group, as part of its debt-funded global growth place it has emerged.

the company initially built an 18% stake in BT in 2021 using so-called funded equity collars. These combine bank loans and derivatives to help investors buy positioning using borrowing money while hedging downside exposure.

Altice has experienced a raft of credit rating downgrades from the likes of Moody’s and S&P, with its debt falling to a CCC+ rating.

Loan documents seen by FT revealed that Altice’s margin loan on BT had a three-year maturity and began to a loan-to-value ratio of 60%, meaning it had to pledge £100 of stock for every £60 borrowed.

What are its impacts on BT Group?

The chief executive of BT Group said that they welcome investors who recognise the long-term value of BT’s business, and this scale of investment from Bharti Group is a great vote of confidence in the future of BT Group and our strategy.

What are its impacts on Bharti?

Bharti was keen to frame the move as a “vote of confidence in the UK as an attractive global destination for investment” and noted that the two companies have a long-standing relationship/

What will happen next?

There are no intentions of Altice to acquire Bharti Enterprises. Bharti Enterprises and BT Group are on the road to building good relationships. Considering that BT group has had a minority stake in Bharti group for a long period.

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Hope you enjoyed it! 

Lemah Islam