Today, BT has announced that it has received notification from the UK government that billionaire Patrick Drahi’s newly acquired 18% stake in the company is set to be examined due to national security concerns. 
This comes as a direct result of a decision by business secretary Kwasi Kwarteng, who is exercising new powers granted to him by the National Security and Investment (NSI) Act 2021…

Today, BT has announced that it has received notification from the UK government that billionaire Patrick Drahi’s newly acquired 18% stake in the company is set to be examined due to national security concerns. 

This comes as a direct result of a decision by business secretary Kwasi Kwarteng, who is exercising new powers granted to him by the National Security and Investment (NSI) Act 2021.

The NSI came into force on January 4 2022, giving Secretary of State the power to ‘call-in’ business transactions for review if they believe the deal could represent a threat to national security.

Earlier this week, Kwarteng had already exercised these powers to call in a review of the takeover of the UK’s largest chip fab, Newport Wafer Fab, by Chinese-backed Nexperia. Sources suggest that other takeovers have also been called in for review without publicity in the past six months.

The investigation into Drahi’s stake does not relate to his entire holdings in the business, but only the most recent 6% he purchases back in December last year.

Drahi formed Altice UK back in June 2021 to take an initial 12.1% stake in BT for around £2 billion. The move immediately made Drahi BT’s largest stakeholder, sparking speculation that the billionaire was seeking to launch a potential takeover. 

Drahi was quick to distance himself from such speculation, however, saying that he did not intend to takeover the business, thereby triggering a legal clause meaning he could not increase his stake for six months. 

During this time, BT set about shoring up its defences against a potential takeover bid, including hiring advisory firm Robey Warshaw LLP to work alongside Goldman Sachs in preparation for a potentially takeover attempt. 

When the December 2021 deadline arrived, Drahi increased his stake in BT from 12.1% to 18%, but once again denied interest in taking over the business. As before, these statements meant that he was not allowed to increase his stake further for the next six months – a new deadline which is now just weeks away and could be the motivation for Kwarteng’s decision to invoke his NSI powers.

“The timing looks linked to Altice’s takeover restrictions lapsing in June, and this may be more a warning about further control being acquired than an objection to the 18 per cent stake per se,” James Barford, an analyst at Enders Analysis, told the Financial Times.

Indeed, given the critical nature of BT’s infrastructure, which carries highly sensitive government data, it seems highly unlikely that the government would allow ownership of BT to be passed to a foreign investor.

This national security assessment is set to last 30 days, though this could be extended to 45 days if necessary. 

What impact does Drahi’s stake in BT have for the wider UK telecoms industry? Find out from the experts at this year’s live Connected Britain event

Also in the news: 
Malaysian telcos continue to clash with govt over 5G
Amdocs buys Mycom OSI in $188m deal
Lithuania begins long-awaited 5G spectrum auction

When it comes to 5G, Malaysia’s strategic approach has been somewhat unorthodox, with the government setting up a national wholesale 5G network operator, DNB, back in 2021.
This approach, the government claimed, would allow for a more efficient rollout of 5G infrastructure across the country and ensure fairer prices for the country’s citizens. The nation’s telcos, however, disagreed, saying that the wholesale prices proposed by DNB were too high and that it would be more effective for them to rollout 5G services themselves…

When it comes to 5G, Malaysia’s strategic approach has been somewhat unorthodox, with the government setting up a national wholesale 5G network operator, DNB, back in 2021.

This approach, the government claimed, would allow for a more efficient rollout of 5G infrastructure across the country and ensure fairer prices for the country’s citizens. The nation’s telcos, however, disagreed, saying that the wholesale prices proposed by DNB were too high and that it would be more effective for them to rollout 5G services themselves. 

By December 2021, uptake of DNB’s 5G offering was so low that the wholesale company was forced to take drastic measures, offering the telcos 5G services for free until the end of March 2022, a period that was later extended to the end of June. 

But despite this olive branch, the impasse between DNB and the telcos continued, leading the government to propose earlier this year that nine Malaysian telcos take a combined 70% stake in the state-owned company. 

At the time, this proposal seemed to please the operators, who said they looked forward to an approach typical of any normal mergers and acquisitions process. Fast-forward to last week, however, and the situation was still mired in controversy, with only Telekom Malaysia and YTL Communications, two of the country’s smaller mobile players, having signed agreements with DNB.

In fact, Malaysia’s four largest operators, Digi Telecom, Celcom Axiata, Maxis, and U Mobile, wrote a joint letter to the operator, suggesting that the minority stakes on offer would not offer them good value.

“The Ministry of Finance-proposed role as minority shareholders does not appear to make it feasible for any of us to add value as shareholders and is not commensurate to our contribution to the industry, or our duty to our shareholders and customers,” said a letter from the four incumbents to the government. 

They also complained that the proposed interconnection terms and the lack of transparency surrounding DNB’s rate of return.

As a result, the four operators last week offered a counterproposal, suggesting that the four of them should take a combined 51% stake in the business.

Now, the Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz has seemingly rejected this plan, according to reports from the Malay Mail. Tengku Zafrul said that the deadline to sign up to DNB’s 5G services by 30 would remain, with the operators left without access to 5G if they do not sign up.

Meanwhile, private equity has long been reported as interested in investing in DNB and, according to the government, these firms would be cleared to do so if the nation’s big four telcos refuse the current equity offer.

Malaysia is already considerably behind neighbouring countries when it comes to 5G, with most neighbouring countries already rolling out the required infrastructure having followed a more traditional spectrum allocation strategy. 

Want to keep up to date with the latest developments in the world of telecoms? Subscribe to receive Total Telecom’s daily newsletter here

Also in the news:
Open RAN players selected for NTIA’s 5G Challenge
Russia’s MTS starts discounting smartphones as sanctions sting
Orange announces new CEOs for B2B and Africa & Middle East operations