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BT Group takeover: Will stock price battered by staff strikes prompt Altice to increase stake?

09:43, 22 September 2022

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  • UK100
    UK 100
    6900.0 USD
    -137.1 -1.950%

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BT Tower in London. Photo: Shutterstock
BT Tower in London. Photo: Shutterstock

The BT Group (BT.A) share price has consistently headed south as industrial action has, and continues, to hit the company hard.

In early July the share price was around the 197p level but has fallen sharply since and is now priced around 134p.  

There seems little sign of resolution to the pay dispute between BT (BT.A) management and staff.  

BT and Openreach workers are set to stage fresh strikes, with the Communication Workers Union (CWU) confirming that members will walk out on 6, 10, 20 and 24 October.

Whether this continued strike action sends the share price lower still is yet to be seen but investors are already seeing the opportunity to buy BT at an historically low price level - five years ago the stock was around the 283p level.

BT Group share price chart

Last week, BT was the second most purchased stock on Hargreaves Lansdown's (HL.investment platform. Analysts at HSBC recently upgraded BT from a ‘hold’ rating to a ‘buy’ rating; while Deutsche Bank (DBK)upgraded the stock from sell to hold.

Simply Wall St judges BT (BT.A) good value based on its Price-To-Earnings Ratio (7.8x) compared to the European Telecom industry average (15x).

The general consensus is that BT (BT.A) is valued attractively right now, the question is whether a company with a significant stake in BT Group, French telecoms giant Altice, will take the opportunity increase its’ shareholding?

Altice, owned by French billionaire Patrick Drahi, has been steadily increasing its stake in BT over several years – to the current 18% position.

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The most recent share purchase (5.9% of shares taking the stake to 18%) was finally given the green light from the UK government this summer following a national security assessment into his Altice company becoming the largest BT shareholder.

In theory, Drahi may look to increase his ownership of BT (BT.A) shares even further. Though how flexible on this the UK government might be is open to question. Drahi has previously stated that he does not intend to make a takeover offer for the company – but that could change.

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Upping the stakes

Danni Hewson, financial analyst at AJ Bell believes there is scope for further interest and not just from Drahi.  

“There’s a big difference between an 18% stake and one of 29.9% and the UK government has given itself plenty of wiggle room to look again at any further moves by Patrick Drahi.

“So far, he’s been clear that he’s not interested in taking over BT but the battered share price might prove too tempting to resist.

Hewson points out that BT has come a long way since it started to implement its turnaround plans but she argues it’s not out of the woods and forward momentum has been disrupted by costly pay disputes which have bubbled over into strike action.

She adds: “Will the actions of fellow French billionaire Xavier Niel change the playing field? His acquisition of a 2.5% stake in Vodafone has highlighted the appeal of UK telecoms companies but investors know nothing can be taken for granted until a deal is signed and delivered.”

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