UK govt to probe Altice BT stake on national security grounds

UK business secretary Kwasi Kwarteng has called in Altice’s acquisition of an additional 6% stake in BT at the end of last year for a full national security assessment.

Kwasi Kwarteng

The Department of Trade and Industry cited the government’s “powers under the National Security and Investment Act 2021 to scrutinise and- if necessary – intervene in qualifying acquisitions on national security grounds” to justify the intervention.

The government now has 30 working days, extendible to a further 45, to carry out its assessment. The DTI said the process is already underway.

Altice, controlled by French-Israeli cable and telecoms tycoon Patrick Drahi, increased its stake in the UK telecom operator from 12% to 18% in December, prompting warnings from the government that it could intervene to prevent a full takeover.

The government’s move comes a few weeks ahead of a deadline that would open BT up to a potential takeover bid by Altice. The French group said at the time it upped its stake that it did not intend to launch a takeover bid, triggering a six-month period under which it is prevented from making such a move under the takeover code.

Patrick Drahi

It is considered unlikely that the UK government would permit a foreign company to acquire BT given its involvement in national security work. BT’s role in extending connectivity nationwide is also likely to come into play in considering any risks associated with Altice upping its stake.

Analysts from Jefferies noted that the call-in is “characterised as an info-gathering exercise” and said they expected that “BT and Altice will be asked to provide large amounts of documentation”.

“It seems reasonable to conclude that the Govt thinks Altice/BT raises relevant national security issues. Fortunately, consensus is not counting on an Altice UK takeover to support the BT share price at current levels. An all-clear in the Govt review is therefore an upside,” Jefferies concluded.