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BT Group’s Altice Lockup Ends Tomorrow – What Happens Next?

Trade BT Shares Your Capital Is At Risk
Updated 13 Jun 2022

Key points:

  • Altice's BT lockup ends tomorrow
  • Which way will Drahi jump?
  • More BT or less BT?

There's currently a lockup in place on BT Group (LON: BT) and how many shares that Altice can buy. That lockup ends tomorrow so the big question is what happens next? Further, how should we position ourselves to benefit from what might?


The big strategic issue with BT (formerly British Telecom, of course) shares is that Altice seems to be significantly interested in the company.

Patrick Drahi, the entrepreneur behind Altice, picked up 12.1% of BT a year back. He also agreed that he'd not make an immediate bid either for the company, nor for more shares. That lasted for 6 months – the day it ended, he boosted his stake to 18%. And made another statement, no more for 6 months. That self-limitation ends tomorrow so clearly, we're all interested in what his next step is going to be.

Drahi and Altice can buy more BT stock from tomorrow. But will he? This then becoming really rather complex. Altice USA is down 60% on its IPO price of $30. That reduces the firepower available to finance a bid or even position. Altice Europe is now private again, which reduces, again, the ability to gain access to capital.

Also Read: How Does Inflation Affect The Stock Market?

So, what's the game? There could well be substantial profit in a leveraged takeover of BT. That's the sort of game that Drahi does like playing – take over a somnolent incumbent, slash costs, refloat. It could, might, work.

On the other hand significant inflation and rising interest rates do not bode well for highly leveraged deals. Which the value of debt does fall over time, it's easy enough to run out of cashflow to service it. So maybe this isn't the time to take a tilt at BT shares?

Then there's the third, or gripping, hand arguments. Which revolve around BT using British politics to protect itself. That current Altice stake in BT shares has already been called in for consideration under the new National Security and Investment Act. It'll take months for anything interesting to come out of that examination, if anything ever does. What's not entirely clear is whether Altice can continue to build its stake while that investigation goes on.

There are, of course there are, other things going on in the telecoms markets. BT is pushing out the nationwide fibre system for example. Altice is, as above, doing well or not so well dependent upon your views. But those are all longer term issues about strategy and so on and really, not part of what might happen this week. Or, perhaps, those strategic issues might determine what happens this week but that's not the issue we've got here. Which is – what are Drahi and Altice going to do when their lockup on BT shares ends tomorrow?

Once we've worked that out then it's possible to build a trading position upon that idea. It's possible to think that Drahi is ambitious enough that he'll go for it. Also possible to think that he'll note those headwinds and move back a little. Either way BT's share price depends, in this short term, on what Drahi and Altice do.