Bharti to acquire 24.5% stake in BT worth $4B

Telecom czar Sunil Bharti Mittal's conglomerate will buy a 24.5% stake in Britain's largest broadband and mobile company, BT Group, worth about $4 billion.

Bharti Global, the international investment arm of Bharti Enterprises, will buy 9.99% stake in BT Group from Patrick Drahi's Altice immediately and purchase the remainder after it had secured the necessary regulatory approvals, the firm said in a statement.

However, it did not disclose financial details, but market watchers say that at BT's valuation of roughly $15 billion dollars, the deal could be in the ballpark of $4 billion range.

Bharti, India's second largest telecom operator with about 400 million subscribers, has had a relationship with BT previously as well. BT owned a 21% stake in Bharti Airtel from 1997 to 2001.

The company is neither keen on making an offer to acquire the whole of BT, nor is it seeking a board position.

Altice, an investment conglomerate controlled by billionaire Drahi, is exiting BT as it struggles with high debt. It first took a stake in BT in 2021, acquiring a 12% holding which it later increased to 24.5%.

BT's shares have fallen by about a third since Altice first became an investor.

"Bharti Global, the international investment arm of Bharti Enterprises, a leading Indian business group with world-class companies in telecoms, digital infrastructure and space communications, has reached an agreement to acquire an interest in 24.5% of the issued share capital of BT Group plc from Altice UK," Bharti said in a statement.

Bharti hopes the investment will further help create new synergies in the telecom sector between India and the UK in the areas of AI and 5G R&D and core engineering among others, "offering great potential to collaborate on industry best practices and emerging technologies".

Sunil Bharti Mittal, Chairman of Bharti Enterprises said: "Bharti and British Telecom (BT) have an enduring relationship going back more than two decades wherein BT owned 21% stake along with two board seats in Bharti Airtel Limited from 1997-2001. Today marks a significant milestone in Bharti Group's history as we invest in BT - an iconic British company".

Bharti's investment in BT aims to support the commitment of Prime Minister Narendra Modi towards his vision in elevating and broadening the India-UK ties, the release said.

It noted that during the recently concluded visit of UK Foreign Secretary, David Lammy to India, the UK-India Technology Security Initiative was announced to expand collaboration in critical and emerging technologies across priority sectors including telecom.

Mittal said: "This investment in BT aims to support the commitment of our Prime Minister towards his vision in elevating and broadening the India-UK ties. Bharti's own record of owning and operating telecom and broadband networks around the world is underpinned by placing customers, digital innovation and operational efficiency at the heart of its business".

Shravin Bharti Mittal, Managing Director of Bharti Global said: "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."

Bharti believes that BT is poised for leadership in the telecom arena, especially home broadband services, he added.

Meanwhile, BT Group, in a separate statement, said the investment from Bharti is a strong vote of confidence in the future of the British telecom carrier and its strategy.

Allison Kirkby, Chief Executive of BT said: "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".

"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 said.

Barclays Bank, acting through its Investment Bank served as the sole financial advisor and Linklaters served as legal advisor to Bharti Global in connection with the transaction.