By Kristy Dorsey

Altice, the telecoms group controlled by billionaire Patrick Drahi, has become BT’s biggest shareholder after spending £2.2 billion to take a 12.1 per cent stake in the business.

Although a stake of 12% is much more than would usually be considered a passive interest in a company, Mr Drahi said the investment was a sign of confidence in BT, given the government’s plan to expand next-generation broadband across the UK. Altice has declared it has no intention of making a bid for BT, which under takeover code rules means it cannot make an unsolicited buyout offer for the next six months.

“BT has a significant opportunity to upgrade and extend its full-fibre broadband network to bring substantial benefits to millions of households across the UK,” Mr Drahi said in a statement. “We fully support the management’s strategy to deliver on this opportunity.

“We understand that the expansion of the broadband network is one of the UK Government’s most important policy objectives and a core part of its levelling up agenda.”

Based in Luxembourg, Altice has more than 40 million customers and is France’s second-largest telecoms provider after Orange. Mr Drahi, who founded the business in 2001 and continues to serve as its chairman, last year delisted Altice from the Amsterdam market arguing that its shares were undervalued.

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The move by Altice follows a series of positive events for BT, including a regulatory ruling by Ofcom that will ease the burden on companies investing in fibre upgrades. BT will also benefit from the “super deduction” announced in the Budget, which allows companies to claim additional tax relief for investments made during the next two years.

BT has committed £12 billion to extending full-fibre broadband connections to 20 million homes by 2026, and last month said it would up that goal to 25 million premises. The additional £3bn cost of this has led the company to consider a joint venture to lay more fibre in rural areas.

In a statement yesterday, BT said it noted Altice’s “support for our management and strategy”.

“We welcome all investors who recognise the long-term value of our business and the important role it plays in the UK,” the company said. “We are making good progress in delivering our strategy and plan.”

A full-blown takeover by Altice is regarded as problematic, as the strategic importance of its networks would likely spark political opposition. Any bid would certainly be referred to the secretary of state for business.

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This raises questions as to how Mr Drahi might help BT address its stretched balance sheet. One possible option would be to encourage the spin-off of BT’s independent Openreach network. Analysts at AJ Bell noted that a second alternative – selling or finding a partner for BT’s sports broadcasting arm – is “already on the table”.

“BT has long traded on a low rating because the market has been concerned about the significant amount of money it has to spend on upgrading communications infrastructure, as well as competition in the broadband space and a large net debt position and a hefty pension deficit,” AJ Bell said in a note to investors.

“Altice is an established name in the telecoms space and the purchase of a 12% holding in BT is a significant move, matching the stake already held by Deutsche Telekom. While Altice says there are no plans to make a bid at the moment, one must expect it to push for changes within the business, given BT needs to find a solution to its very stretched balance sheet and how the market generally has a negative view of the company.”

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At 12.1%, Altice comes in just ahead of Deutsche Telekom’s 12.06% stake, meaning that BT counts Europe’s largest incumbent telecoms group and one of the sector’s most aggressive dealmakers as its two largest shareholders.

Known for buying undervalued telecoms assets, Mr Drahi controls French news channel BFM TV. He also owns the largest telecoms firm in Portugal, along with the second-largest operators in both Israel and the Dominician Republic.

BT is cutting 13,000 jobs across its operations, and will have closed 270 of its UK sites by 2023. The company has also sold off the London headquarters that have been its home since 1874 in a £210m deal, with plans to move to a new central office by the end of this year.

Shares in BT, which have rebounded by more than 90% since hitting 11-year lows last summer, closed more than 6% higher yesterday at 195.15p.