Carlos Slim’s BT stake may just be a prelude
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Pierre Briancon
LONDON, June 13 (Reuters Breakingviews) -As New York Times stakeholders discovered during the global financial crisis, Carlos Slim has an eye for a bargain. The Mexican billionaire and controlling owner of Latin America’s $52 billion telecommunications group América Móvil AMXB.MX just spent $520 million to acquire a 3% stake in BT BT.L. He is joining the crowd of investors encouraged by the $17 billion UK telco’s latest results, and confident that new CEO Allison Kirkby has started to turn around the once-beleaguered group.
Slim’s BT interest looks like a straightforward equity punt. The group's shares, which rose 3% on news of the Mexican’s arrival, are up by more than 25% since Kirkby announced a month ago a major improvement in free cash flow thanks to lower capital expenditure and strong cost cuts. But they are still only trading at the level of a year ago, 30% below their pre-pandemic price. And analysts surveyed by the group have an average 195 pence target for the shares, 46% above BT’s current level.
Slim is unlikely to intend to launch a full bid for BT, for two reasons. The first is he might not be welcome in the UK, where a security review would be launched if he wanted to take control of the group. Governments throughout Europe have been keen to keep their major telcos under domestic control. The second reason is the memory of Slim’s failed attempt in 2012 to take control of KPN KPN.AS, the Dutch group, against the wish of the government.
Slim however has scope to increase his stake in BT. Germany’s Deutsche Telekom DTEGn.DE is nursing a 3.5 billion pound paper loss on its 12.5% stake since receiving it as payment for its share in EE, the UK mobile operator sold to BT in 2016. It may want to wait for better times before deciding on a disposal. Patrick Drahi, owner of a 24.5% stake, on the other hand has a $60 billion debt problem. He might be happy to sell all or some of his holding, now worth 2 billion pounds after the recent weeks’ bump.
For the Mexican mogul, that wouldn’t be quite the same as a full takeover. But given his experience in Europe, that may be no bad thing.
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CONTEXT NEWS
Mexican magnate Carlos Slim has taken a 3.16% stake in BT, Britain's biggest broadband and mobile operator, according to a stock market filing on June 12.
The stake bought by Slim, whose family controls telecommunications giant América Móvil, has a market value of about 408 million pounds ($522 million), based on BT's closing share price on June 12.
BT shares were up 3% in London to 133 pence as of 1052 GMT.
Total returns of European telcos since the pandemic https://reut.rs/4b0xhTa
Editing by George Hay and Streisand Neto
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