Germans back ‘sleeping giant’ BT as rising debt hits stocks

One of BT’s biggest shareholders throws weight behind embattled telecom operator after shares plunge over summer

One of BT’s largest shareholders has shrugged off the controversial telecom operator after its shares collapsed over the summer.

German company Deutsche Telekom – which owns 12 percent of the former British state monopoly – backed BT chief Philip Jansen and his plan to provide up to 25 million households with full fiber optics by the end of 2026.

BT shares have fallen from more than £2 in June to £1.58 after the company announced lower-than-expected earnings and said it took on more debt to fund the rollout of superfast 5G internet.

Tough times: BT shares have fallen from over £2 in June to £1.58 after the company announced lower-than-expected earnings

But Timotheus Hottges, head of Deutsche Telekom, said: “We believe that in the future BT has solved many problems when it comes to the rollout of fiber and Ofcom relationships, has now solved most of their pensions and has set a clear path in the future.” market has.

“They solve one problem after another. This will certainly help the business succeed. We see value in that company.’

Shares of BT rocketed earlier this year when Altice – a telecommunications company owned by French-Israeli tycoon Patrick Drahi – took a 12.1 percent stake.

It slipped after City analysts expressed fears surrounding BT’s trading update in July. Drahi is seen as a potential buyer for Deutsche Telekom’s stake, which retained its stake in BT after its £12.5 billion acquisition of EE in 2016.

His arrival fueled rumors that he could push for a shakeup at BT, potentially forcing a sale of all or part of its Openreach infrastructure arm.

It has also been suggested he could move to buy BT, although politicians could try to block any deal and he’s committed to City’s takeover rules that prevent him from making an offer until December, when new chairman Adam Crozier takes over. takes over.

But at the Goldman Sachs Communacopia conference, also attended by Jansen, Hottges said of his BT stake: “We’re not a salesperson right now. That is very clear.’ Jefferies analyst Jerry Dellis said the statement sounded “extremely confident” in light of the expansion by rival Virgin Media O2.

Virgin has plans to bring full-fibre broadband to 15.5 million buildings by 2028 following the merger with O2.

Deutsche Telekom has written off €3.3 billion on investments in BT and has placed the stake in its pension fund. The stake has lost an estimated €9.1 billion in value.

Drahi has seen the value of his stake fall by £300m. Sources said his next move could be determined by the outcome of a €6 billion sale of Altice’s Portuguese arm.

Bankers at Lazard have polled potential bidders for its Portuguese division, including Spain’s MasMovil.

Sotheby’s owner Drahi has built a formidable reputation after cutting costs in operations in Portugal and France, where even toilet paper was rationed.

A telecom manager said: ‘BT is a sleeping giant. If Patrick wants to buy more, it probably depends on selling the Portuguese company for a good price.”

Separately, Sir Leonard Blavatnik’s DAZN is in advanced negotiations to buy BT’s TV sports business.