French telco Altice’s purchase of 5.9% of shares in BT last year won’t face sanctions under the National Security and Investment Act (NISA), it was revealed today. But any further attempts by Altice and its owner Patrick Drahi to up its stake in the operator could face renewed scrutiny, the government has warned.
Altice, which is controlled by billionaire entrepreneur Drahi, took its first stake in BT in June 2021, paying £2.2bn for a 12.1% share of the former state-owned monopoly. Under stock market rules it couldn’t purchase more shares for another six months, but when that time elapsed it took another 5.9% for £1bn taking its share up to 18%.
The second acquisition was called in for a full national security assessment by business secretary Kwasi Kwarteng in May this year under NISA, which gives the government the ability to scrutinise and intervene in acquisitions on national security grounds.
This legislation was introduced in 2021 and has already seen the proposed takeover of UK electronic design automation company Pulsic by Chinese entity Super Orange HK blocked on national security grounds. An investigation into the acquisition of Newport Wafer Fab by Chinese-owned Nexperia under the act is ongoing.
In a statement today the government said it will take no further action against the 5.9% acquisition by Altice and had issued a final notification to both parties that the issue has been closed, but warned it could take action against Altice if it makes any further attempt to purchase shares in BT.
“The government will always act to protect the UK’s critical national telecoms infrastructure if we judge action is necessary,” a government spokesman said.
Altice is now BT’s largest shareholder
With an 18% stake in BT, Altice is now the company’s largest single stock holder. At the time of the second share purchase, a government spokesperson said it was monitoring the situation carefully and would not hesitate to act to stop BT from being taken into foreign hands.
Drahi has previously stated he does plan a full take-over bid for BT, and the company says today’s news means he won’t have to reduce his stake in BT, though it currently isn’t clear whether he plans to increase his stake.
With BT still controlling most of the UKs telecom infrastructure through subsidiary Openreach it has been the subject of takeover speculation for years. Deutsche Telekom is the BT’s second largest shareholder, and boss Tim Hoettges has said in the past that the company was entertaining all options around its stake in BT and could make a move in future.
NISA gives the UK Government final say over any acquisition of a major infrastructure company like BT by a foreign-owned company.
“In the case of BT, the government is likely to focus on the preservation of critical infrastructure operated by BT, as well as preserving the security of information relating to certain government contracts,” according to analysis by Marie-Claire Strawbridge, a partner at law firm Morrison Foerster.
She added: “Most notifications under the NSIA are not expected to be called in and are unlikely to raise issues, so these first exercises of the new call-in power will be key to understanding how the Government plans to balance conflicting imperatives of protectionism with showing that the UK remains an attractive place for investment. Recent activity suggests that close scrutiny can be expected in the short term while the new regime beds down.”