Like any good soap opera, 2021 ends with a mix of action and suspense on the European telecommunications market. Two of the national flagships of the sector could indeed change hands in the coming months. The American investment fund KKR, first, formulated, at the end of November, a public expression of interest on Telecom Italia, valuing the company around 11 billion euros. Then the billionaire Patrick Drahi, already owner of SFR, on December 14, increased his stake in BT (formerly British Telecom) to 18%, six months after entering the capital, to 12.1%.
“The vultures are approaching. The title of the last study by research firm Enders Analysis devoted to BT, dated December 9, is explicit: the British company is a prey that interests the world. At the head of the “vultures” is therefore Mr. Drahi. For the time being, the latter assures that he does not have “Not intending to make an offer” on the operator.
The Franco-Israeli billionaire is certainly still far from the 30% threshold which, according to British regulations, would oblige him to launch a takeover bid on BT, the whole of which is currently valued at around 18 billion euros. However, industry watchers note that this bar could be reached by buying, for example, Deutsche Telekom’s 12% stake in BT.
BT has embarked on a major investment plan to install fiber optic across the UK, a country lagging behind in this technology
The appetite for the British telecommunications company can be explained by a simple look at its share price, which has been divided by three in five years. The pound sterling is also relatively low. Seen from abroad, the business suddenly looks like a good deal. “The stock price is probably close to its low point”, says James Bradford of Enders Analysis. BT has indeed embarked on a major investment plan to install optical fiber across the United Kingdom, a country lagging behind in this technology. These heavy expenses have weighed on his accounts, but they should start to pay off in a few years.
Difficulties inherent in the market
The KKR fund’s interest in Telecom Italia responds to a similar observation. The Italian operator’s price has halved in five years, but there is reason to believe a rebound. Italy is also lagging behind in optical fiber. Nevertheless, the government of Mario Draghi wishes to remedy this, which could, again, lead to profits in the medium term.
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