BT’s new investor not a passive shareholder says JP Morgan
Drahi has always had “ambitious return expectations for all of his investments,” said JPM and is unlikely to be satisfied by “modest” double-digit return on his investment in BT.
Altice, Drahi’s business, will likely get a seat on the BT board, and it is unlikely to be a passive shareholder, says JPM.
But to deliver change will require a collaborative relationship both with BT management and Deutsche Telekom, its other major shareholder.
“We suspect Altice’s strategic focus will be on accelerating BT’s infrastructure monetisation (towers and fibre) and ‘financial engineering’” or shifting capex off the balance sheet.
JPM believes Drahi’s move underpins its upbeat view on BT’s cash flow and that the risk posed by new private equity-backed fibre optic network operators is over-estimated.
“Overweight” with a target price of 225p is the broker’s view.
Shares rose 0.4% to 192.7p.