UK government extends review of BT stake owned by French tycoon Patrick Drahi

Altice bigwig now telco's largest shareholder but denies it's a takeover attempt

The UK government has extended its national security assessment into the increasing ownership of BT shares by French telco tycoon Patrick Drahi, and has reportedly requested more information regarding the acquisition.

Announced in May, the investigation on Drahi's investment in the telecoms giant was sparked by the purchase of an extra 6 percent of BT shares by Altice UK, a company wholly owned by Drahi, who also controls the telecoms outfits Altice France and Altice International.

Under the terms of the National Security and Investment Act (NSIA), the government had 30 working days to carry out its assessment, but that deadline passed at the end of last week. The assessment can be extended by up to a further 45 working days, and it appears that this is the case, according to Bloomberg, which reported that the government had requested more information about the BT deal, citing "people with knowledge of the process."

Altice UK announced it had taken a £2 billion ($2.37 billion) stake in BT Group just over a year ago, this equated to a 12.1 per cent share of the former state-owned monopoly, which still operates much of the country's telecommunications infrastructure via its Openreach subsidiary. Altice UK was set up solely for the acquisition.

As The Register reported at the time, Altice attempted to calm management at BT by assuring them that it did not intend to make a takeover offer for the company.

Drahi also said that he was bound by stock market regulations that prevented him from making any such further investments for six months.

However, in December 2021, when those six months had elapsed, Altice UK increased its stake in BT to 18 percent, or a total of 1,785,476,188 shares, making it – and Drahi – the largest shareholder.

Altice UK restated its position to the BT board that it did not intend to make an offer for the rest of BT and said it would be bound by that statement for the purposes of Rule 2.8 of the UK's Takeover Code. But that would only prevent Altice from expanding its stake in BT for a further six months, which has now elapsed.

The move worried the UK government enough that it used its new powers under the NSIA, which came into force at the start of this year, to call in the acquisition for a full national security assessment.

As this assessment is still ongoing, it would appear that the Department for Business, Energy & Industrial Strategy (BEIS) has extended the deadline, although it declined to confirm or deny this in response to our queries.

Instead, a spokesperson sent us this statement: "The acquisition of 6 percent of shares by Altice in BT was called in for a full national security assessment on 25 May. Under the National Security and Investment Act the length of the assessment period may be affected by decisions by the Secretary of State to: issue Information or Attendance Notices; to put in place an Additional Period; or agree a further Voluntary Period with the acquirer."

We also asked if the BEIS was likely to reverse the acquisition by Altice of the extra 6 percent of BT shares, but the spokesperson merely told us: "The Business Secretary has powers under the National Security & Investment Act to intervene in acquisitions where necessary."

This is not the only ongoing case under the NSIA. Also in May, the government announced it was starting a full national security assessment into the acquisition of Newport Wafer Fab by Nexperia.

Newport Wafer Fab is the UK's largest semiconductor facility, and one of the few such facilities still left in the country. It was acquired by Nexperia – a spinoff from NXP Semiconductor – last year, but Nexperia is itself now owned by a Chinese company, Wingtech Technology.

Last month, it was also reported that the UK government was considering whether to use the NSIA to force Arm's parent company SoftBank to change its mind over listing the chip design firm exclusively on the Nasdaq in New York, as it has indicated. ®