Kwasi Kwarteng to review French billionaire’s BT stake over security concerns

The UK government has launched a “full national security assessment” of the French telecoms billionaire Patrick Drahi over the increase in his stake in BT to 18%.

The business secretary, Kwasi Kwarteng, said on Thursday he was exercising his “call-in power” under the National Security and Investment Act 2021 after Drahi’s Altice company increased its stake in BT from 12.1% to 18% in mid-December making him the single biggest shareholder.

The call-in powers granted through the new Act allow ministers to block transactions linked to important national assets and even unwind them retrospectively, if they are deemed to harm national security.

The government had previously warned that it would “not hesitate to act” to protect BT from a foreign takeover, if necessary to protect the country’s fibre network.

“The acquisition by Altice of [another] 6% of shares in BT has been called-in for a full national security assessment by business secretary Kwasi Kwarteng,” the government said in a statement.

“The government has powers under the National Security and Investment Act 2021 to scrutinise and – if necessary – intervene in qualifying acquisitions on national security grounds.”

BT said it would “fully cooperate with this review”. The shares fell 3%, making BT one of the biggest fallers on the FTSE 100 on Thursday afternoon.

Mike Clancy, general secretary of BT union’s Prospect, said: “BT is one of the jewels in the crown of UK R&D and tech innovation, so it is right that the government is taking an active role in scrutinising its future.”

The business department has 30 working days to carry out an assessment of national security risks, which can be extended by another 45 days if deemed necessary.

When Drahi increased his stake in December, he said he did not intend to launch a full takeover of BT, but said that could change if circumstances did – including if a third party made an offer. Under the UK’s takeover code rules, he was prevented from making a takeover bid for six months after making the statement that he did not intend to bid. That expires in June.

The Franco-Israeli entrepreneur, 58, who made his estimated £5.3bn fortune in the telecoms industry, is based in Switzerland and known for his secrecy. In a rare interview with a French magazine he said: “If you want to be successful … listen and do not talk too much.”

An art lover who owns works by Pablo Picasso and Henri Matisse, Drahi bought the auction house Sotheby’s for $3.7bn (£2.9bn) in 2019.

Born in Casablanca, Morocco, in 1963 to two maths teachers, Drahi moved to France as a teenager and holds Israeli, French and Portuguese citizenships. He lives in Switzerland, where he has homes in Geneva and the ski resort of Zermatt.

Drahi attended the École Polytechnique in Paris, the French university famed for turning out the country’s most successful business leaders and politicians. After working for a number of cable and satellite TV companies he co-founded two of his own in the south of France in the mid-1990s. The businesses did well enough to catch the eye of the “cable cowboy”, John Malone’s UPC, now the Virgin Media-owner Liberty Global, in a share deal buyout from which Drahi eventually made €40m (£34m).

The National Security and Investment Act’s rules – which apply to key sectors including communications, energy, defence and transport – came into effect in January, and have been described by the government as the “biggest shakeup of the UK’s national security regime for 20 years”.

It is the second time this week the government has exercised the new powers. On Wednesday, Kwarteng said he had launched an inquiry into the proposed takeover of the UK’s largest microchip manufacturer, Newport Wafer Fab, by the Chinese-backed Nexperia.

Kwarteng said the government “welcome[s] overseas investment, but it must not threaten Britain’s national security”.

Comments are closed.