Patrick Drahi Ups Stake in BT to 18% Drawing Defensive Response From U.K.

The 175-year-old BT is in the middle of a $20 billion transformational program to build a national fiber network, a strategy crucial both to the company and the government, which is looking to boost regional growth levels

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File photo: French-Israeli businessman Patrick Drahi, October 9, 2018.
Patrick Drahi, 2018.Credit: Philippe Wojazer/Reuters

Patrick Drahi said Tuesday he had increased his stake in U.K. telecommunications giant BT to 18%, drawing a defensive response from the British government even though the French-Israeli telecoms entrepreneur said he did not intend to launch a takeover.

Drahi, BT's biggest shareholder who has pursued debt-fuelled deals to snap up assets in France, the United States, Portugal and Israel, said he had engaged constructively with the board and management of BT and looked forward to continuing that dialogue.

The British government said it was monitoring the situation closely and would not hesitate to act if required.

"The government is committed to levelling up the country through digital infrastructure, and will not hesitate to act if required to protect our critical national telecoms infrastructure," a spokesman said.

Drahi announced in June he had bought a 12.1 percent stake in BT, worth 2.2 billion pounds ($2.9 billion) at the time.

"We continue to hold (BT management) in high regard and remain fully supportive of their strategy, principally to play the pivotal role in delivering the expansion of access to a full fiber broadband network; an investment program which is so important to both BT and to the U.K.," he said in a statement.

BT said it had been notified that Drahi's Altice U.K. had increased its stake.

"The board and management of BT Group will continue to operate the business in the interest of all shareholders and remains focussed on the successful execution of its strategy and building on recent performance momentum," the company said.

Drahi reiterated that he does not intend to make an offer for the company under British takeover rules.

He increased his stake, at a price of 1.02 billion pounds ($1.35 billion) based on BT's closing share price on Monday, after a previous six-months standstill expired at the end of last week.

The 175-year-old BT is in the middle of a $20 billion transformational program to build a national fiber network, a strategy crucial both to the company and the government, which is looking to boost regional growth levels.

While British governments have traditionally welcomed foreign investment and takeovers, any full bid for BT would put ministers in a difficult position due to BT's role in protecting national security.

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