Decades after BT offloaded its stake in Sunil Bharti Mittal’s conglomerate, the Indian billionaire kept up calls with executives at the UK telecoms group.
Then another billionaire’s financial troubles gave Mittal a chance to reconnect with the former UK telephone monopoly.
Patrick Drahi’s indebted group Altice and BT’s largest investor wanted to sell its 24.5 per cent stake. Mittal on Monday agreed to take the entire holding, valued at £3.2bn at Friday’s closing price, in what is the Indian tycoon’s most significant investment on British soil to date and a historical turnabout.
Between 1997 and 2001, BT held a 21 per cent stake in Mittal’s New Delhi-based telecoms business — what has since become the $100bn market cap flagship behemoth Bharti Airtel.
“It’s a bit of a role reversal,” said one Bharti executive after the deal was announced. “It’s a very large tranche — if it had been a smaller one we wouldn’t have been interested.”
On a call with reporters, Mittal emphasised the long-term nature of the investment. He said: “I’ve kept links with the BT management, with every successive CEO in the company [since 2001]”.
He added that his conglomerate Bharti Enterprises was approached by Altice “in the past couple of weeks”. With the French group attempting to prune back its more than $60bn debt pile, “we were happy to engage, which we did enthusiastically”, Mittal said.
Although analysts say that Mittal’s move was not an obvious one given his conglomerate’s focus on India and Africa, it builds on his foundations in the UK.
Bharti Enterprises holds controlling stakes in satellite venture OneWeb and also owns prestigious hotel brands, including The Hoxton and the Gleneagles resort in Scotland, operated by a company founded by his son-in-law. Bharti’s Africa telecoms business is a member of the FTSE 100.
Mittal, whose family wealth is estimated at $16.8bn by Forbes, was awarded an honorary knighthood by King Charles III this year for services to UK-India relations. The 66-year-old spends much of his time in London, where two of his children — his daughter Eiesha and son Shravin, who heads Bharti’s overseas investment arm — are based.
The deal also sprang from personal ties. Drahi and Mittal know each other, according to a person familiar with the matter, and multiple executives at BT and Bharti have experience working at both companies. BT’s chief digital and innovation officer Harmeen Mehta was formerly Bharti Airtel’s global chief information officer and head of its cloud and security business.
“It’s a sector he understands, it’s a company they understand and they’ve already got global reach outside of India,” said another person with knowledge of the founder’s thinking. “There’s long-standing familiarities that also reinforced his confidence in what this company can be.”
Mittal’s purchase also plays into the wider trend of heightened Indian corporate interest in the UK. India is the country’s second-largest source of foreign direct investment: there are more than 950 companies with combined revenue of about $65bn operating in Britain — up from 900 in 2022, according to the UK India Business Council.
Those investments are playing out as both New Delhi and the new Labour government in London attempt to revive free trade talks. UK foreign secretary David Lammy visited India last month to restart discussions that were suspended due to elections in both nations.
India’s government is looking to secure wider market access for its goods, including textiles, as well as an easing of restrictions on Indians working and studying in the UK.
Piyush Goyal, India’s commerce minister who is leading the trade talks, in a post on social media platform X, called Bharti’s BT acquisition a “testimony to the growing strength of India”.
Mittal has deftly managed previous British purchases, including a 2021 deal to become the biggest shareholder in OneWeb ahead of the UK government following a joint effort to rescue the space-internet pioneer from bankruptcy.
With BT, he will buy 10 per cent of Altice’s holding immediately, with the rest to be purchased after regulatory approvals, including voluntary UK security clearance.
“We have not asked for any board seat, we have not even applied our mind to that,” said Mittal, who ruled out taking a controlling stake in BT. “At the moment, our focus was just to pick up the stake. We are having no conditions attached to that.”
For BT’s chief executive Allison Kirkby, who has pledged to cut £3bn of costs and increase its dividend, Mittal’s purchase “offered a strong validation” of her six-month old leadership at BT, said Paolo Pescatore, founder and TMT analyst at PP Foresight.
He described the deal as “seeming like a bolt out of the blue”, comparing Mittal’s decision to take such a large stake with other investors that have instead steadily brought and increased their holdings in European telcos.
Mittal’s move will leave the UK telecoms group with a “much more stable shareholder”, according to a person familiar with BT’s thinking. “It removes at a stroke [the risk of] a severely forced sale in the market of a large stake.”
On Monday, BT’s shares closed up 8.4 per cent up at 141.5p. Mittal said UK and European telecom companies were “poorly valued” and that BT’s strategy under Kirkby has been “nothing but outstanding”.
“I think the investor community will over a period of time start to recognise the wonderful job that is being done,” the tycoon added.
Karen Egan, head of telecoms at Enders Analysis, agreed that BT “is undervalued”. She added: “It’s had a good run of late but there’s more to go. When you look at it on a 2-3 year view when the cash flow recovery story is delivered on, it will look incredibly cheap.”
A first-generation entrepreneur born in the state of Punjab, Mittal started out in business in 1976 making bicycle parts, initially borrowing $1,500 from his father — a politician and former member of parliament in the country’s upper house.
Mittal branched out into making telephones and in 1992 bid for a licence in order to launch one of India’s first mobile phone companies as the country began to liberalise its economy.
Three years later he founded his telecoms group, which has grown to become India’s second-largest with more than 400mn subscribers in its home market and a wide network across Africa. Domestically Bharti Airtel is second only to rival Indian billionaire Mukesh Ambani’s Jio, which entered and upended the industry in 2016 with a fierce price war.
Mittal is a lower key figure than Ambani, Asia’s richest man. The Ambanis made headlines with an extravagant months-long celebration of the marriage of their youngest child Anant, estimated to have cost hundreds of millions of dollars this year. They are also fronting India’s efforts to host the 2036 Olympic summer games.
“He’s got a lot of clout . . . but the Mittals don’t crave that much attention compared to some of the other corporate groups,” said a Mumbai-based analyst whose company has advised Bharti Airtel on past transactions. “They prefer to remain private and as a group they seem to be more focused on professionalising their operations than some of these other entities.”
While Bharti has various business interests, such as its Indian partnership with Del Monte, it is mainly seen as a telecoms company, in contrast to Ambani’s Reliance Industries, which cuts across a broader swath of industries, including retail and oil refining. The Ambani family also own British trophy assets, including toy chain Hamleys, as well as country club Stoke Park.
Mittal and Ambani’s Jio network operate a near duopoly in India with the now state-owned Vodafone Idea lagging behind. The two industrialists have spent billions of dollars helping India realise “one of the quickest 5G rollouts globally”, according to Axis Capital in Mumbai.
“[BT] won’t be the last deal,” the Bharti executive said about the conglomerate’s ambitions.
