ALEX BRUMMER: BT needs Britsh backers to help bring superfast broadband to the nation

BT boss Philippe Jensen has been looking for an outside investor to accelerate and finance the telecommunications giant’s rollout of superfast fiber at the door for some time now.

This was one of the factors that accelerated the sudden resignation of Jan du Plessis as chairman. But no one expected the cavalry to come so fast.

Debt-ridden Franco-Israeli telecommunications billionaire Patrick Drahi has snatched a 12.1 percent stake in BT for £2.2 billion without warning and is offering to sit down with Jensen and the board to discuss the future.

Rollout: BT Openreach is working all-out to improve the UK’s broadband network and the government’s obligation to bring fiber to neglected rural areas

He boldly states that he wants to help BT Infrastructure offshoot Openreach to meet the ambitious target of supplying fiber to 25 million British homes by 2025.

This is never going to be easy given the £3 billion a year cost, which is almost half of BT’s underlying income.

BT now has two strategic investors, Altis Europe’s principal Druhi and Deutsche Telekom with a 12.06 percent stake.

How Jensen is able to empower Drahi to help derive value from the fiber is unclear.

However, Druhi has a history of financial engineering, liquidating infrastructure assets and bringing in private equity money.

It is a huge player in the sector with ownership of France’s second largest network SFR and telecommunications assets in Western Europe, Israel and the Caribbean.

On occasion his debt-fueled private equity approach has forced him to relinquish possessions and assets to repay the loan.

The billionaire investor, the owner of trophy property Sotheby’s, has pledged that his raid is not purely a prelude to the takeover.

It would be surprising if he used his weight to demand at least one seat on the BT board, if not more.

This would give them a platform for the kind of ruthless cost-cutting at SFR where employees reportedly found themselves wandering around for toilet paper and printer refills.

The timing of the liqueur is good. A long and outrageous decline in BT’s share price is being halted.

It has benefited from Jenson’s decision to take down its expensive sports TV franchise, a lower-than-expected price paid for 5G bandwidth in the recent spectrum auction and the easing of price controls by regulator Ofcom.

He also attacks during board ups and downs. Bids and deals legend du Plessis is still present and the search for the next chairman is on.

Former Kingfisher boss Ian Cheshire is backed by Jenson, but his candidacy is withheld, while senior non-executive Ian Cohn, formerly of Centrica, conducts a search.

Britain’s old superfast broadband network did better than expected during the pandemic, but it is not well suited for the purpose of widespread adoption of digital services and home work.

This is far from the pace compared to South Korea, Japan and even Spain. Openreach is flat out working to catch up and the government has an obligation to bring fiber to neglected rural areas.

It faces formidable obstacles. There is a real difficulty in gaining access to multi-resident offices and blocks of flats in urban areas such as London because many landlords eventually reside overseas, many in tax havens in the British Virgin Islands.

It is pressing Downing Street for legal changes that would allow it to enter such premises as long as residents agree.

The erosion of the UK’s manufacturing base for telecommunications equipment has meant that much of the fiber and technology, such as the boxes used to distribute fiber in blocks of flats, has to be sourced from Corning in the US and other foreign suppliers.

It finds it difficult even simple tasks like replacing its British-made fleet of diesel trucks with electric ones to meet carbon emissions targets as supplier Vauxhall has no EV van production in the UK.

Brexit offers Britain great opportunities away from the bureaucratic interference of Brussels. It is puzzling and sad that when it comes to critical infrastructure renovations, BT has to respond to a foreign investor with mixed reputation to shake things up.

How a pity the UK’s huge fund management industry doesn’t put its shoulder on the wheel and believes it to shake off poorly performing giants like BT by investing in next-generation R&D, equipment, free from the restrictions set by Brussels. There is a real opportunity to give. and infrastructure.


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