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How will BT shares react to Altice’s £2bn investment and 12.1% stake?

France’s second largest telecoms giant Altice, overseen by billionaire Patrick Drahi, has acquired a 12.1% stake in BT. The investment is seen as a vote of confidence in BT shares and the company’s ambitious full fibre roll-out.

  • BT share price up 2.11% during early trading on 10 June.
  • Contributions to BT Pension Scheme set to fall by £300m.
  • BT set to provide full fibre to 25 homes by end of 2026.
  • Ready to trade the BT share price? Open an account today

Will the BT share price react favourably to Altice’s involvement?

Early indications suggest that the market sentiment is positive towards Altice's investment in BT. The BT share price is up 2.98% in early trading on the morning of 10 June. Altice has invested in telecoms networks across the globe in recent years, with current holdings in France, the US, Portugal, Israel, and now the UK.

Altice president Patrick Drahi believes BT to be the best-placed of all UK telecoms companies to revolutionise the UK’s broadband network, describing its ‘significant opportunity’ to ‘extend its full-fibre [capabilities] to millions of households’.

BT CEO, Philip Jansen, has long insisted that the telecoms giant requires trusted, long-term investors to work alongside them to upgrade the British broadband network – an undertaking requiring hefty capital expenditure.

Altice is now the largest shareholder of the company, with its 12.1% stake inching them ahead of Deutsche Telekom’s 12% shareholding.

Are plans afoot for Altice to launch a takeover of BT long-term?

At the time of Altice’s investment in BT shares, the telecoms investor has shown no appetite to make a bid for a majority shareholding. Consequently, under the terms of the takeover code, Altice cannot submit a buyout offer for a minimum of six months without prior approval from BT’s senior management.

In a statement announcing Altice’s involvement, BT said that it ‘welcomes all investors who recognise the long-term value of [its] business’.

The statement added that the UK’s telecoms giant was ‘making good progress in delivering [its] strategy and plan’ for a full-fibre future nationwide.

Should investors in BT shares be confident about the future?

Although the BT share price has plunged over 55% in the last five years, there is a genuine sense that BT shares are on the rise again. They appear to have bottomed out during the Covid-19 pandemic, finding significant support above 100p per share. The current share price today is 188p, with BT shares surging 39.18% in the year to date.

BT recently restored its cash dividend, equating to a yield worth approximately 4.4% per annum, giving investors fresh confidence. In addition, the firm confirmed it would be slashing annual contributions to the BT Pension Scheme by £300m from July 2024 – a saving that would instantly improve BT’s bottom line.

It must also be noted that BT’s vast capital expenditure on the UK’s new full-fibre network will be offset, in no small part, by the UK government’s new 130% tax super-deduction.

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This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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