# Exclusive-New investor backs BT, says fibre JV may not be needed – source
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-06-28
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: BT's New Investor Backs Fibre Roll-Out Without Partner
Meta Description: BT's new billionaire investor, Patrick Drahi, supports the British telecoms group to proceed independently with fibre and 5G network expansion plans,
URL: https://financedigest.com/exclusive-new-investor-backs-bt-says-fibre-jv-may-not-be-needed-sourcehtml

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By Paul Sandle and Kate Holton

LONDON (Reuters) -BT’s new billionaire investor is backing the British telecoms group to go it alone, seeing no need to sell a stake in network arm Openreach or perhaps even to find a partner for its fibre roll-out, a person familiar with the situation said.

Patrick Drahi, a Franco-Israeli telecoms entrepreneur, surprised investors earlier this month when he announced that he controlled 12.1% of BT, making him the biggest shareholder and driving the company’s stock to a 17-month high.

The 57-year-old met BT’s management in London last week, two sources said, with one saying he confirmed in private what he has said in public – that he backs BT spending billions to build the fibre and 5G networks [Britain needs to boost](https://www.financedigest.com/britain-boosts-aid-for-syria-turkey-after-earthquakes.html "Britain boosts aid for Syria, Turkey after earthquakes") productivity.

The stake purchase sparked speculation that Drahi might pressure BT to [sell](https://www.financedigest.com/intercos-fund-shareholders-l-catterton-otpp-sell-6-stake-at-7-discount.html "Intercos fund shareholders L Catterton, OTPP sell 6% stake at 7% discount") a stake in Openreach or spin it off, and it came less than a month after the group set out a plan to find a partner to help build part of its new fibre network.

But the person, who spoke on condition of anonymity, said Drahi and some of BT’s other major investors, which include [Deutsche Telekom](https://www.financedigest.com/deutsche-telekom-reaches-majority-stake-in-t-mobile-u-s-ceo.html "Deutsche Telekom reaches majority stake in T-Mobile U.S. – CEO"), did not think a fibre joint venture was needed, unless a partner could access cheaper capital.

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

BT is planning to spend 15 billion pounds ($21 billion) on an [investment upgrade that will help transform the future](https://www.financedigest.com/investing-in-the-city-thats-investing-in-itself-welcome-to-the-liverpool-of-the-future.html "INVESTING IN THE CITY THAT’S INVESTING IN ITSELF – WELCOME TO THE LIVERPOOL OF THE FUTURE!  ") of the company that traces its history back to 1846.

[JOINT VENTURE](https://www.financedigest.com/the-window-blinds-market-to-be-led-by-constructive-joint-ventures.html "The Window Blinds Market To Be Led By Constructive Joint Ventures")?

Drahi bought into BT after the group overcame a series of potential hurdles, including the agreement of a new regulatory regime, a spectrum auction, pension negotiations and soccer rights renewals.

The company will also be a big beneficiary of a super-deduction tax break, helping underpin its [plan announced in May to build](https://www.financedigest.com/best-guide-to-build-a-personal-financial-plan.html "Best Guide to Build a Personal Financial Plan") a fibre network serving 25 million homes by the end of 2026 – five million more, and earlier, than previously planned.

[CEO Philip Jansen said at the time](https://www.financedigest.com/ogrady-to-return-to-bank-of-ireland-as-ceo-irish-times.html "O’Grady to return to Bank of Ireland as CEO – Irish Times") BT was looking for an investment partner to help with the additional connections.

However, some major BT shareholders are keen for the company to [fund the additional](https://www.financedigest.com/need-additional-funding-but-not-sure-how-to-go-about-it.html "Need additional funding but not sure how to go about it?") investment itself, unless a partner could provide capital at a substantially cheaper cost, the source said, adding the chances of a partnership had diminished.

While a joint venture [deal for the extra five million](https://www.financedigest.com/royal-mail-adds-canada-freight-strength-with-287-million-rosneau-deal.html "Royal Mail adds Canada freight strength with 7 million Rosneau deal") connections could give a value for the whole network, it would also take some of the future earnings.

BT shares are up 30% since the joint venture plan was publicised in May and the Drahi investment revealed, valuing the group at 20.3 [billion pounds](https://www.financedigest.com/edf-delays-uk-nuclear-project-to-2027-ups-price-by-3-billion-pounds.html "EDF delays UK nuclear project to 2027, ups price by 3 billion pounds").

The improved share price also means a stake sale or spin-off of Openreach is not on the immediate agenda, with [management and some investors believing a company](https://www.financedigest.com/anyone-can-write-assignment-need-people-able-apply-new-skills-workplace-says-top-investment-management-company.html "“Anyone can write an assignment, but we need people to be able to apply their new skills to the workplace,” says top investment management company") split would be a distraction during the fibre roll out, the source said.

Openreach is BT’s networks [unit which analysts say](https://www.financedigest.com/offshore-crews-to-strike-on-bps-north-sea-installations-says-unite.html "Offshore crews to strike on BP’s North Sea installations, says Unite") is undervalued within the group.

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

Jansen told the Times newspaper [last week that he had an “excellent” relationship](https://www.financedigest.com/brand-loyal-brits-have-longer-relationships-with-their-car-than-their-last-lover.html "BRAND-LOYAL-BRITS HAVE LONGER RELATIONSHIPS WITH THEIR CAR THAN THEIR LAST LOVER") with Drahi, who saw “huge potential” in BT.

Drahi owns the BT stake through Altice UK.

Deutsche Telekom owns just a shade less than Altice at 12.06% and has a seat on BT’s board. But that came when BT bought EE from Deutsche Telekom and Orange, and a board seat for Drahi’s Altice had not been discussed, Jansen told the Times.

($1 = 0.7187 pounds)

(Reporting by Paul Sandle and Kate HoltonEditing by Guy Faulconbridge and Mark Potter)


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