Reducing costs: Patrick Drury (center) celebrates his firm Altice’s New York flotation. He has now BT. has bought 12.1 percent stake in
The billionaire owner of Sotheby’s auction house has bought a £2.2 billion stake in BT, making him the telecom giant’s biggest investor.
Shares rose after Patrick Drahey announced a 12.1 percent stake and backed BT’s £15 billion plan to introduce fast fiber broadband in the UK.
But the investment, through his company Altice, raises fears of the ‘king of cost-cutting’ could prompt BT’s top executives to cut costs.
Insiders said he was keen to work closely with BT’s management, including chief executive Philip Jensen, to take the company forward – although he told the takeover panel that he did not intend to buy the company, a notification that six Lasts for a month.
Drahi said: ‘BT has a significant opportunity to upgrade and expand its full-fibre broadband network to substantially benefit millions of households across the UK. We fully support the management strategy.
Shares jumped 6.6 percent, or 12p, to 195.15p on the news. BT said it welcomes “all investors who recognize the long-term value of our business.”
The former state monopoly was privatized in the 1980s, but its share price has declined over the past five years.
BT Sport has not done as well as its rival Sky and the company is in talks to sell the arm.
It has also faced repeated criticism for its service to broadband and telephone customers.
But investors see an opportunity in BT’s OpenReach, which charges companies including Sky, Shell and TalkTalk to piggyback on the network to provide consumer broadband.
BT shares hit an 11-year low last year, but have bounced back after regulator Ofcom’s price control was eased.
Its mission to roll out broadband has been sweetened by Rishi Sunak’s two-year ‘super-deductor’ tax break for investment projects.
Rishi Sunak’s two-year ‘super-deductor’ tax break for investment projects has also sweetened BT’s mission to roll out broadband across the UK.
BT has said it is seeking investors to improve UK broadband, and will consider a funding partner.
It is also looking for a new chairman, following the resignation of Jan du Plessis following a disturbance in the boardroom.
Drahi, who holds French, Israeli and Portuguese citizenship, is very famous in the telecom world.
He has broken up companies in Europe and the US since the early 2000s, when he founded Altice. Over the past two decades he has developed it into a giant, and has gained a reputation as a rigid cost cutter.
The unions of the French company SFR even claimed that their members faced a shortage of loo rolls and printer paper after Altis took power. In March SFR said it could cut 1,700 jobs this year – 11 percent of its workforce.
Altice claims that reducing costs now means you can increase profits and have free money to invest.
In 2019, Drahi bought a 94 percent stake in Sotheby’s for £2.6 billion. Following a similar £116million debt-fueled handout in November, the art dealer was criticized for borrowing £211million in dividends to its owners.
He was praised for his skills, but suffered a setback in 2017 when Altice’s share price collapsed due to concerns that it could not pay off its large debt.
Altice, which insiders say is ‘run like a family business’, ousted its chief executive and brought Drahi back as chairman.