UK government to probe Altice’s BT stake

The UK government is to examine the national security implications of French telecoms group Altice’s 18 per cent holding in BT, weeks before the investment vehicle controlled by billionaire Patrick Drahi will become free to make a takeover bid for the prized national asset.

BT said on Thursday it had received a notification that business secretary Kwasi Kwarteng was exercising his “call-in power” under the new National Security and Investment Act to examine December’s increase in the French company’s stake.

Kwarteng will now have 30 working days to assess the holding on national security grounds, although that could be extended by 45 days if necessary.

Altice announced in December that it was increasing its stake in BT from 12 per cent to 18 per cent, worth more than £3bn.

In a statement, the UK government said it had “powers under the National Security and Investment Act 2021 to scrutinise and — if necessary — intervene in qualifying acquisitions on national security grounds”.

It added: “The business secretary has decided to call in the acquisition of 6 per cent shares by Altice of BT for a full national security assessment.”

When it increased its stake, Altice said it did not intend to make a bid for BT, meaning that under the takeover code it could not make an unsolicited buyout offer for six months. That period will expire in mid-June.

“The timing looks linked to Altice’s takeover restrictions lapsing in June, and this may be more a warning about further control being acquired than an objection to the 18 per cent stake per se,” said James Barford, an analyst at Enders Analysis.

“BT is highly sensitive in national security terms — it does work for a government that it is not allowed to talk about, as well as being crucial for network resilience. I would not expect the government to allow a full takeover or control to pass to a foreign investor.”

In a statement, BT said it would “fully co-operate with this review”. Its shares fell 5 per cent on Thursday.

Altice did not immediately respond to a request for comment.

The NSI Act, which came into force on January 4 this year, allows greater scrutiny of foreign takeovers of companies in sensitive industries.

It gives the secretary of state power to call in acquisitions “that the secretary of state reasonably suspects give rise to or may give rise to a risk to national security”, according to a business department (BEIS) document.

“The secretary of state may then clear the acquisition or, if necessary and proportionate, impose certain conditions, block or unwind it completely.”

This is the second intervention of this kind by the secretary of state that has become public.

The first came on Wednesday evening when Kwarteng said he was examining the takeover last year of Newport Wafer Fab, in Wales, by Nexperia, a Dutch subsidiary of Chinese company Wingtech.

Other takeovers have been quietly called in since January without any publicity, according to officials.

The NSI legislation was first proposed by former prime minister Theresa May to widen the number and type of deals that could be scrutinised by the British government, amid growing unease about hostile foreign powers gaining access to UK technology.