BT needs a sturdy chair to handle Altice’s Drahi
Typical. No sooner do you leave the EU than a Frenchman arrives to lend a hand to the process of “ramping up”.
It’s Patrick Drahi’s sportsman, really. The Franco-Israeli billionaire went to the trouble of setting up a new company, Altice UK, to gobble up 12.1% of BT, worth £ 2 billion, and expressed his support for the strategy of l company consisting in accelerating the deployment of its broadband network entirely in fiber.
The investor was quick to point out that he understood this to be one of the “most important political goals” of the UK government. He stopped before adding that he was there to help rebuilding a better future, or similar.
The arrival of a greedy and greedy billionaire on the ledger would upset many CEOs. But BT boss Philip Jansen, who also counts German incumbent Deutsche Telekom as a 12 percent shareholder, should draw attention.
Drahi has made headlines in recent years as owner of auction house Sotheby’s and for his efforts to restructure his heavily indebted European telecommunications and cable group, which he ultimately privatized this year. But he made a name for himself and his fortune by seeking out unloved cable assets, like Cabovisão in Portugal or Hot Telecom in Israel, cutting costs and increasing margins as he sought other deals.
The idea that Drahi’s expertise will help boost BT’s fiber optic deployment seems a bit far-fetched. The increasingly Franco-German group formerly known as British Telecom is already laying fiber in 560,000 premises a quarter (so apart from anything else, you hope it knows what it’s doing). Drahi’s reputation is that of a financial operator rather than a technical genius, although together with Altice Portugal, he operates in a market with almost 80% optical fiber to the home, which is about double the average. of the EU.
Jansen, by his own admission an impatient man, is trying to convince investors that BT has put its years of growth in the strategic wilderness behind it – and that the £ 15bn investment in fiber will pay off (even if it is not entirely clear when). In Drahi, he at least found a fiber enthusiast. The Frenchman will almost certainly support Jansen’s efforts to reduce bureaucratic weight and shake up a cumbersome corporate culture.
There is no imminent prospect of a takeover bid: Drahi has ruled out an offer with the UK Takeover Panel, which closes this avenue for six months. Either way, the UK government’s current skeptical view of foreign interest in UK assets, especially critical infrastructure, would make the journey difficult. BT’s share price rose this week, but only rose about 3% on Thursday when the Frenchman arrived.
Drahi’s playbook (and there is undoubtedly one) is different from the roll-ups of the past. He has not (yet) applied for a seat on the board of directors. On the contrary, his arrival would appear to put aside discussions of investing or separating the infrastructure arm Openreach for the time being, while providing a willing strategist once the fiber deployment is more advanced.
An important question for BT is what will happen next in the boardroom, where veteran chairman Jan du Plessis has said he will step down, but no successor has yet been announced.
Du Plessis’ decision to leave was apparently prompted by a conflict between his methodical style and his CEO’s desire to move quickly. Perhaps the South African was not a natural fit for an entrepreneurial and technological overhaul. But he’s a seasoned pro at dealing with external anxieties, including the rising prices AB InBev was willing to pay for beer maker SABMiller. He even has experience with stubborn billionaires, dealing with Glencore’s Ivan Glasenberg when he turned to Rio Tinto.
BT’s new chairman, whoever he is, could step into a three-ring circus, with a CEO in a hurry, a new shareholder with big ideas and the natural conservatism of Deutsche Telekom (which has a seat on the board of directors). ) offering a margin of tension.
As the Frenchman deals with fixing the country, BT needs to upgrade its board for the job.