BT has been a pawn in others games for too long
Hope dies last. This is one way of interpreting Deutsche Telekom's reaction to the recent changes in the shareholding structure of UK telecoms group BT, in which Telekom has held a 12% stake since the sale of its mobile communications joint venture EE.
The Management Board is hoping for impetus „for the benefit of BT shareholders and customers“. Deutsche Telekom has something in common with French billionaire Patrick Drahi, who is now selling his – twice as large – BT share package to Bharti Global. Both miscalculated when taking a stake, seeing plenty of upside potential. Though Drahi would have had more reason to believe that his calculations would work out, because when he bought into the company in 2021, BT shares were already looking back on a year-long price slide.
Almost a third down
But the busy investor Drahi, who has been forced to make distressed sales from his portfolio in order to reduce his gigantic debt mountain of around 60 billion euros, has still been confronted with a loss of almost a third on BT. Neither Drahi's determined arrival at BT, nor the arrival of Mexican Carlos Slim, in sparked more than a flash in the pan on the stock market. Bargain hunting alone is not a strategy.
Like its domestic competitor Vodafone, which also has a number of significant shareholders at the table, the British telecoms giant has become a pawn in the hands of investors who do not hold back in advising the Board of Directors in order to serve their interests. It is not immediately clear whether Bharti Airtel is an exception. However, the Indian group has announced a few „suggestions“ and has committed itself to long-term involvement.
The European telecoms sector is certainly no bed of roses. It is struggling with share price pressure and is, therefore, attracting financial investors. However, the British group has some of its own particular risks. These include high investment in the fixed network at the same time as customer losses, fierce competition in mobile telephony in the domestic market, and a high dependency of the international business on the IT service division, which is struggling to keep up with global heavyweights. Patience is the shareholder virtue of the hour. Telekom probably has no other choice.
