After BT, Bharti may consider more opportunities in Europe: Mittal

The Bharti group’s European foray through a 24.5% share buy in BT Group Plc was a signal that Indian business groups like itself were ready to take the global stage, said Bharti Enterprises Ltd chairman Sunil Mittal, highlighting that the steps into global markets were backed by the Indian government.

“The Indian government is continuously encouraging a handful of companies that have gone global to accelerate the process. We operate in 16 countries already, and now, having the UK and starting a chapter on the European continent is the next step,” Mittal said in an interaction with the media after the announcement on Monday.

The Indian government is continuously encouraging a handful of companies that have gone global to accelerate the process. We operate in 16 countries already, and now, having the UK and starting a chapter on the European continent is the next step

Bharti Televentures UK Ltd, a wholly owned subsidiary of Bharti Enterprises’ international investment arm Bharti Global, will buy the equity in the UK’s largest mobile and broadband services provider from telecom services provider Altice UK, which has a 24.5% stake in BT. Bharti Televentures will buy 9.99% of BT from Altice immediately, and the remaining 14.51% after receiving regulatory clearances.

The Bharti group was ready to take the initiative to make investments in developed markets after having cemented its position in the India market over the years and created a global telecom major Airtel that now boasts of strong cash flows, even as it took a break from overseas investments in telecom after entering Africa in 2008, Mittal said.

Mittal indicated that Altice’s 24.5% stake of BT’s £14 billion market cap could be valued at about £3.4 billion. Altice is owned by Israeli-French telecom billionaire Patrick Drahi, who also owns auction house Sotheby’s.

Bharti group has voluntarily applied for clearance under the UK National Security and Investment Act, as part of the regulatory clearing process.

Indian companies’ investments in UK-based companies have yielded mixed results. Jaguar Land Rover (JLR) has experienced fluctuations but is currently driving Tata Motors Ltd, while Tata Steel Ltd’s acquisition of Corus has become a burden for its Indian parent.

Bharti comes a full circle with the acquisition of BT shares, Mittal said, as the British group had held a 21% stake in Bharti Airtel between 1997 and 2001, and now the Bharti group has become the single largest shareholder in the entity. Mittal clarified that the Bharti group was not buying any additional stake and it did not have any intention to manage the telecom company, which is also the reason behind it not taking any seats on the board.

Mittal noted that the stake buy was a strategic move and financially attractive since European and UK telcos were trading at low multiples. Having gained a foothold in Europe with BT, Mittal said the group’s entry into the continent will be strategic and that it was looking at more investment opportunities in the European telecom market.

He added that any telecom-related expansion will be done through Airtel, and that the carrier will continue to strengthen its position in India over the next two to three years before it begins to relook at opportunities outside India. “Whenever Airtel makes a move, it needs to not just be an investor, it needs to be an operator. In this particular case, this was an investment, we are not going and operating BT, we are backing their management and their strategy.”

He noted that during that time frame, the capex requirements of the telecom company will go down and cash flow will become stronger, and at that time, the board may look at global opportunities.

“All the investments we have made into Airtel are now yielding great rewards in terms of stock price, market cap, and strong cash flows. This gives us the confidence and opportunities to look beyond India. Airtel is already present in 17 countries and if more opportunities arise, we will not shy away,” Mittal added.

All the investments we have made into Airtel are now yielding great rewards in terms of stock price, market cap, and strong cash flows.

While Airtel will not be connected to the investment in BT, Mittal said that there may be sharing of best practices between the two telcos owing to the commonality in shareholding.

Govt, India Inc laud Bharti

The government lauded Bharti group’s move, with commerce and industries minister Piyush Goyal congratulating Sunil Mittal, Rajan Bharti Mittal and Rakesh Bharti Mittal, promoters of Bharti Enterprises.

The Indian High Commissioner to the UK, Vikram Doraiswami, also welcomed the deal. “Delighted Bharti Global of India is investing in 24.5% of the shares of UK’s BT Group. This will support BT’s plans to build fibre, roll out 5G and develop services. This vote of confidence in India-UK is a great step after the Technology Security Initiative,” he said in a social media post, PTI reported.

“What a proud moment for India. Congratulations to Sunil Bharti Mittal sir and his whole Bharti team,” said Vijay Shekhar Sharma, chairman, and managing director of One97 Communications.

Allison Kirkby, chief executive of BT Group, said, “We welcome investors who recognise the long-term value of our business, and this scale of investment from Bharti Global is a great vote of confidence in the future of BT Group and our strategy.”

Deutsche Telecom will continue to hold 12% stake in BT. “We see this as a positive step for BT. We have a long and good working relationship with Bharti. So, we are looking forward to work together with Bharti in the Board of Directors for the sake of BT shareholders and customers,” said Timotheus Höttges, CEO, Deutsche Telecom.

Mittal said that the share acquisition will be funded by a mix of equity and financial support from Barclays Bank PLC, which was the sole financial advisor in the transaction.

Mittal said such a block of shares was difficult to buy in the market and therefore when the offer was made to the group it was willing as it would increase its presence in the UK, where it has invested across sectors.

Bharti group and UK ties

“Our investments in the UK have been there for the last several years and this is an addition to that journey we’ve had in that country, to put in more capital at work here, in a sector which we understand, in a company that we know, and importantly in a country that now has a very deep and close relationship with India,” he said.

Mittal said that Bharti Global, that has had long-term investments in the UK including satellite broadband provider OneWeb which merged with Eutelsat in 2023. The UK government and Bharti Global are shareholders in the company.

On being asked about OneWeb-Eutelsat’s launch of services in India, Mittal said that the company was ready and had asked the Indian government to allow it to offer services temporarily, till the time the government decides on the methodology of allocating spectrum.

Bharti group also has investments in the hospitality and real estate sectors, including Norlake Hospitality. Bharti Global owns marquee hotels including The Hoxton, Scottish resort Gleneagles, while hospitality assets are managed and operated by Ennismore.

Mittal referred to the recently concluded visit of UK foreign secretary David Lammy to India, where the UK-India Technology Security Initiative was announced to expand collaboration in critical and emerging technologies across priority sectors including telecom.

India and UK are expected to conclude their free-trade agreement (FTA) talks soon which began in January 2022 with 14 rounds of talks between them before both countries entered their general elections. The two governments are also negotiating a bilateral investment treaty.

The group said in the statement issued Monday that it was hopeful of creating new synergies in the telecom sector between both countries in the areas of AI and 5G R&D and core engineering. It added that there was potential to collaborate on industry best practices, and emerging technologies.

British Telecom, too, has had a longstanding association with Indian companies. British Telecom had a 50% stake until 2006 in Mahindra group’s software arm, Tech Mahindra, then known as Mahindra British Telecom. After Tech Mahindra went public in 2006, British Telecom’s stake, which started as a joint venture with Mahindra Telecom in the mid-80s, decreased from 50% to 36%. Subsequently, it sold its entire stake.

In 2000, Tata Tea spent £271 million to buy Tetley, In April 2020, TVS spent £16 million to buy Norton Motorcycles.