The nineteenth century Austrian diplomat Metternich is supposed to have reacted to the death of French statesman Talleyrand by inquiring: ‘What did he mean by that?’
I mention this anecdote by way of a warning that sometimes, people’s actions are over-interpreted. Still, it’s hard not to pose the same question about French tycoon Patrick Drahi’s move to increase his stake in BT to 18 per cent.
Maybe it’s as simple as the man himself suggests: he just thinks BT is a good investment and believes he can make money from the rollout of full fibre broadband. But maybe, just maybe, there’s more to it.
Ulterior motives? French tycoon Patrick Drahi (pictured) said he just thinks BT is a good investment and believes he can make money from the rollout of full fibre broadband
By building his stake over time, Drahi may be adopting a ‘boiling frog’ approach to taking over BT. The metaphor is that if you throw a frog into a bubbling pot, the scalded amphibian will leap out immediately.
But if you put the poor beast in warm water and heat it up slowly, it will float around quite serenely until it is too late.
On this reading, Drahi may be seeking to accustom the Government gradually to his presence at BT, so that he comes to seem a suitable owner.
It’s just a theory. The point is, we don’t know what his plan is and that is not an acceptable situation for a company as important as BT. In the pandemic, it played an essential role.
The impact of Covid-19 on the economy would have been unimaginably worse without high-functioning broadband and telephony allowing many of us to work from home.
High-speed fibre broadband will be a big element in future prosperity. Helped by the British taxpayer via Rishi Sunak’s super-deduction, BT is aiming to bring it to 25m premises by 2026.
The attitude of the Government to overseas takeovers has so far been relaxed, but the speed of its response in this case is encouraging.
It fired a warning shot at Drahi – who may have underestimated the political sensitivities around BT – saying it would not hesitate to act to protect critical national telecoms infrastructure.
Ministers should not wait for a formal bid to materialise before getting involved.
They should act now, before the water gets too hot.
Drahi ought to be transparent about his intentions and about how he has accumulated his voting rights.
The language of BT’s statement is intriguing in this respect. It refers to him having increased his interest in the ‘voting share capital’ of the company.
The phraseology suggests he may have gained control over a substantial chunk of votes without actually buying the shares, possibly by borrowing them.
Drahi’s camp deny it, saying that his vehicle Altice ‘owns the shares outright’.
Yet he won’t say how much he spent on his stake or give any other details.
That is not good enough. There is a clear public interest in exactly how he has gained control over such a large chunk of the votes, and the risks and costs he has incurred.
The UK has always had an open attitude to shareholding and ownership. Rightly so, but that does not mean we should be naïve about the dangers of leaving our national assets vulnerable to opportunists.
Maybe Drahi does not wish to bid but to agitate for change, perhaps by demanding board seats or by ousting BT bosses.
Ministers ought also to take a look at that model, deployed by so-called activist investors who create maximum disruption with minimum risk and accountability.
Virtually every single person in this country has an interest in BT. It has 782,500 private investors, many of whom bought in the privatisations of the Thatcher era.
Some 14m households in the UK are customers and 100,000 are employees.
Each and every one of us has a right to clarity on Drahi’s plans. Then there is the £4.3billion black hole in the pension fund, which has nearly 280,000 members.
Bidders sometimes manage to slough off their obligations to retirement schemes.Even if that were not the case in any future bid for BT, a change of control could raise the risks to the scheme.
Drahi may be an astute financier, but is he a responsible steward for BT?
Shares in the telecoms giant have been disappointing and it has too often fallen short in corporate strategy and customer service.
Still, BT deserves better than being treated as a pawn in a billionaire’s power games – and more to the point, so do we.