a potential bidding war with Patrick Drahi
A report has claimed that Mukesh Ambani is set to make an offer for BT.
Economic Times reported that the billionaire is considering a bid for the UK telecommunications company in order to expand Jio’s telecom footprint.
It was said that Reliance was considering whether to either buy BT, take a controlling stake or help fund the full-fibre rollout of BT’s broadband network operator Openreach.
The reports pushed shares by as much as a tenth on November 29, 2021.
However, Mr Ambani’s Reliance Industries denied the speculation, calling the report “speculative and baseless”.
A Reliance spokesperson “categorically denied any intent to bid for the UK telecoms group”.
A bid could have put India’s biggest conglomerate into a potential bidding war with Patrick Drahi, BT’s largest shareholder, who is rumoured to be preparing a takeover approach for the telecoms operator.
Mr Drahi founded the French broadband challenger Altice and has a reputation as an aggressive cost-cutter.
He became BT’s biggest investor in June 2021 after taking a 12pc stake. A lock-up preventing Mr Drahi from buying more shares or making a takeover offer expires on December 11.
Another report claimed a number of buyout companies and infrastructure funds had completed new analysis of Openreach that valued the business at £40 billion.
Earlier in November 2021, BT chose not to bring in an outside investor to bolster its ultra-fast broadband upgrade after the cost of upgrading its ageing copper network fell 5pc to between £250 and £350 per premises.
BT’s plan to upgrade 25 million homes and businesses to full-fibre by 2026 is now being solely delivered by Openreach.
Shares closed 6.1pc higher at 163.4p, making it the biggest riser on the FTSE 100 and valuing the company at £16.2bn.
Mr Ambani has been expanding Reliance to challenge Amazon and Walmart in India’s online retail market.
He is believed to be focused on increasing his interests in green energy, prompting him to abandon a plan to sell a fifth of his oil and chemicals arm to Saudi Aramco.
A BT deal would have opened up a fresh battle with Vodafone, which competed with Mr Ambani’s Jio through Vodafone Idea.
Vodafone’s joint venture with India’s Aditya Birla Group had been on the brink of collapse after it was ordered to repay billions of pounds to the Indian government.
Vodafone’s chief executive, Nick Read, ruled out putting any more equity into the business and wrote down the value of its investments.
James Barford, of Enders Analysis, said the takeover interest in BT was related to its full-fibre rollout, which is costing the company more than £1 billion a year.
He said: “At some point in the future they will get a return, but that point in the future is sufficiently far ahead – beyond 2026 – which is beyond the normal time horizon of a traditional BT investment.
“It poses an obvious question: ‘Given all the interest in infrastructure assets is there a type of investor that would be more suited to this?’
“When it comes to timing, if it looks like one party is going to make a bid, and you are potentially interested, that is when you get ready to make a bid.
“If a company is seen as in-play that promotes interest from others who might not be making the initial push.”