EXCLUSIVE New investor backs BT, says fiber JV might not be necessary – source

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  • Patrick Drahi became BT’s # 1 investor in June
  • A billionaire does not push to sell the network – source
  • Large investors think fiber JV may not be necessary – source

LONDON, June 28 (Reuters) – BT’s new billionaire investor (BT.L) is backing the British telecommunications group to go it alone, seeing no need to sell a stake in the network arm Openreach or perhaps even to finding a partner for his roll of fiber-out, said a person familiar with the situation.

Patrick Drahi, a Franco-Israeli telecommunications entrepreneur, surprised investors earlier this month by announcing that he controlled 12.1% of BT, making him the largest shareholder and taking the company’s stock to a peak of 17 months.

The 57-year-old met with BT’s management in London last week, two sources said, one claiming to have privately confirmed what he said in public – that he claimed BT was spending billions on build the fiber and 5G networks that Great Britain needs to increase its productivity. .

The purchase of the stake sparked speculation that Drahi could pressure BT to sell or split a stake in Openreach, and this came less than a month after the group made a plan to find a partner for the stake. help it build part of its new fiber network.

But the person, who spoke on condition of anonymity, said that Drahi and some of BT’s other major investors, including Deutsche Telekom (DTEGn.DE), did not believe a fiber joint venture was necessary, unless ‘a partner can access cheaper capital.

BT and Drahi spokespersons declined to comment. Deutsche Telekom did not immediately respond to a request for comment.

BT plans to spend 15 billion pounds ($ 21 billion) on an investment upgrade that will help transform the future of the company whose history dates back to 1846.

JOINT-COMPANY?

Drahi bought BT after the group overcame a series of potential hurdles, including agreeing to a new regulatory regime, a spectrum auction, pension negotiations and the renewal of football rights.

The company will also be a big beneficiary of a super-deduction tax break, helping to underpin its plan announced in May to build a fiber network serving 25 million homes by the end of 2026, or five million more. , and earlier, than expected.

CEO Philip Jansen said that at the time, BT was looking for an investment partner to help with the additional connections.

However, some major BT shareholders want the company to fund the additional investment itself, unless a partner can provide capital at a significantly lower cost, the source said, adding that the chances of a partnership had decreased.

While a joint venture agreement for the additional five million connections could add value to the entire network, it would also take a portion of future profits.

BT shares are up 30% since the joint venture plan was made public in May and Drahi’s investment was revealed, valuing the group at £ 20.3 billion.

The improvement in the share price also means that a stake sale or split in Openreach is not on the immediate agenda, with management and some investors believing that a split in the company would be. a distraction when deploying the fiber, the source said.

Openreach is BT’s networking unit that analysts say is undervalued within the group.

“The cost of separation would be enormous,” the source said.

Jansen told The Times newspaper last week that he had an “excellent” relationship with Drahi, who saw “huge potential” in BT.

Drahi owns BT’s stake through Altice UK.

Deutsche Telekom owns slightly less than Altice at 12.06% and sits on BT’s board of directors. But it happened when BT bought EE from Deutsche Telekom and Orange, and a seat on Drahi’s Altice board had not been discussed, Jansen told The Times.

($ 1 = 0.7187 pounds)

Reporting by Paul Sandle and Kate Holton; edited by Guy Faulconbridge

Our standards: Thomson Reuters Trust Principles.

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