Private equity discovers patience is a virtue for European telecom bets
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Drahi dials up BT Group
It is no wonder that European telecoms companies have started reporting better revenue growth. The number of inbound calls from private equity companies looking for a deal has been booming.
On Wednesday afternoon it was UK telecoms group BT that rediscovered it’s good to talk.
Billionaire Patrick Drahi was on the blower to tell them that his telecoms acquisition vehicle Altice had built a 12.1 per cent stake in the company.
Longtime DD followers should know Altice well. They were the private equity-style magicians who promised to work over unloved European telecoms assets by swiftly cutting costs and improving operations.
It was a choppy ride as the debt, which fuelled its dealmaking, consumed its promise. Last year Drahi took Altice private and argued that shareholders were undervaluing the business he had built.
Altice says it has no intention of making a full bid. A yawning pension deficit and a nationalistic government do make a buyout look unlikely and Deutsche Telekom, which also has a 12 per cent stake in BT that was once seen as an acquisition foothold, long gave up those ambitions.
Time will tell if Altice has an ulterior motive but the BT move — building a minority stake in a national champion — is a change in style for Drahi. Either way, BT needs a strong chair to handle its new shareholders, writes the FT’s Helen Thomas.
Perhaps it’s a sign of the times: for all the private equity potential in European telecoms, patience is a virtue.
Private equity stalkers EQT/Stonepeak and KKR failed to tempt KPN, the Dutch telecoms company, into meaningful talks despite months of teasing their interest.
KKR had more success in Spain where it was one of the funds that bought out MasMovil, but a move to get involved in a Telecom Italia network merger plan has dragged on and has now become overly complicated.
TDC — seen as the first domino in European telecoms when it was bought by Macquarie and some pension funds in 2018 — only on Thursday said that it expected to have finally split the network and service arms of the Danish telco, a key move in creating value, by the end of the year.
Whatever Drahi’s long-term plan, it seems that holding on the line may be the best option.