Typical. No sooner do you leave the EU than a Frenchman turns up to lend a hand to the “levelling up” process.
It’s sporting of Patrick Drahi, really. The Franco-Israeli billionaire has gone to the trouble of creating a new company, Altice UK, to gobble up a 12.1 per cent in BT, worth £2bn, and expressed his support for the company’s strategy of pushing ahead at speed with the rollout of its full fibre broadband network.
The investor was quick to point out his understanding that this was one of the UK government’s “most important policy objectives”. He stopped short of adding that he was here to help reconstruire un meilleur futur, or similar.
The arrival of a hard-charging, acquisitive billionaire in the register would unsettle many CEOs. But BT boss Philip Jansen, who also counts German incumbent Deutsche Telekom as a 12 per cent shareholder, is likely to welcome the attention.
Drahi has in recent years made headlines as the owner of auction house Sotheby’s, and for his struggles to restructure his debt-laden European telecoms and cable group, which he eventually took private this year. But he made his name and his fortune bargain-hunting for unloved cable assets, such as Portugal’s Cabovisão or Israel’s Hot Telecom, slashing costs and boosting margins as he sought out more deals.
The idea that Drahi’s expertise will help supercharge BT’s fibre rollout seems a touch far fetched. The increasingly Franco-German group formerly known as British Telecom is already laying fibre past 560,000 premises a quarter (so apart from anything else you’d hope it knows what it’s doing). Drahi’s reputation is as a financial operator rather than a technical whizz, even if with Altice Portugal he operates in a market with nearly 80 per cent fibre to the home, about double the EU average.
Jansen, by his own admission an impatient man, is trying to convince investors that BT has put its ex-growth years in the strategic wilderness behind it — and that the £15bn investment in fibre will pay off (even if it’s not entirely clear when). In Drahi, he has at least found a fibre enthusiast. The Frenchman will almost certainly support Jansen’s efforts to chop away at bureaucratic heft and shake up a stodgy corporate culture.
There is no prospect of an imminent takeover: Drahi has ruled out a bid with the UK Takeover Panel, which closes that avenue down for six months. In any case, the UK government’s current sceptical view of foreign interest in UK assets, particularly critical infrastructure, would make for a rough ride. BT’s share price has been on the up this week, but rose only about 3 per cent Thursday on the Frenchman’s arrival.
Drahi’s playbook (and there undoubtedly is one) looks different to the roll-ups of the past. He hasn’t (yet) asked for a board seat. If anything, his arrival would seem to shelve talk of investment into or separation of infrastructure arm Openreach for now, while providing a willing strategiser once the fibre rollout is further advanced.
One important question for BT is what happens next in the boardroom, where veteran chair Jan du Plessis has said he will step down but no successor is yet announced.
Du Plessis’s decision to depart was seemingly brought on by a clash between his methodical style and his CEO’s desire to move at pace. Maybe the South African wasn’t a natural fit for an entrepreneurial, tech-led overhaul. But he is a seasoned pro at handling external angst, including driving up the price AB InBev was prepared to stump up for beer maker SABMiller. He even has experience with headstrong billionaires, handling Glencore’s Ivan Glasenberg when he turned his attentions on Rio Tinto.
BT’s new chair, whoever he or she might be, could be walking into a three-ringed circus, with a CEO in a tearing hurry, a new shareholder with big ideas and the natural conservatism of Deutsche Telekom (which does have a board seat) providing scope for tension.
While the Frenchman gets on with fixing the country, BT needs to level up its board for the job.
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