Indian billionaire denies BT takeover interest

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BT Tower
BT Tower

India's richest man has been forced to deny he is preparing a bid for BT after shares in the former state telecoms monopoly surged on speculation of a takeover tussle between international billionaires.

Mukesh Ambani's Reliance Industries said a report in India’s Economic Times was "speculative and baseless", easing a rally that pushed up shares by as much as a tenth on Monday morning.

Reliance was reportedly weighing whether to either buy BT, take a controlling stake or help fund the full-fibre rollout of BT's broadband network operator Openreach.

A spokesman for Reliance "categorically denied any intent to bid for the UK telecoms group".

A tilt could have thrust India's biggest conglomerate that spans energy, telecoms, online retail and digital services 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 after taking a 12pc stake. A lock-up preventing Mr Drahi from buying more shares or making a takeover offer expires on Dec 11.

A separate report from the Mail on Sunday claimed a number of buyout companies and infrastructure funds, including CVC, Apax, Brookfield and Macquarie, had completed new analysis of Openreach that valued the business at £40bn.

BT opted earlier this month 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 25m homes and business 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, who has a net worth of $94bn (£70bn), has been diversifying Reliance beyond its ownership of the world's largest refiner of crude oil to challenge Amazon and Walmart in India's fast-growing online retail market.

The tycoon is believed to be focused on stepping up 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 deal for BT would have opened up a fresh battle with Vodafone, which competed with Mr Ambani's mobile network Jio through Vodafone Idea.

Vodafone's embattled joint venture with India's Aditya Birla Group had teetered on the brink of collapse after it was ordered to repay the Indian government billions of pounds in fees.

The Vodafone chief executive, Nick Read, has 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 £1bn a year.

"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.” he said.

"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".

BT declined to comment.

Who is Mukesh Ambani?

India's richest man Mukesh Ambani is a significant presence in the oil industry as well as telecoms - CHANDAN KHANNA/AFP via Getty Images
India's richest man Mukesh Ambani is a significant presence in the oil industry as well as telecoms - CHANDAN KHANNA/AFP via Getty Images

When Asia's richest man handed over £57m in April for an English country club featured in the James Bond film Goldfinger, rumours were abuzz over his next step.

There was speculation that Mukesh Ambani could make Stoke Park his primary home, after he shut the mansion in August for two years of extensive restoration work. But the tycoon was forced to deny plans to swap billionaire's row in Mumbai, India, for the Georgian hotel set within 300 acres of Buckinghamshire countryside.

Instead, Stoke Park would help expand "the footprint of India's famed hospitality industry globally", said Reliance Industries, the oil-to-telecoms giant controlled by Ambani.

It became the second UK trophy asset for the 64-year-old, who snapped up British toy retailer Hamleys for £68m in 2019.

On Monday the Reliance chairman nicknamed 'Muku' was believed to be preparing a third strike on British business and the latest attempt to expand internationally when he was linked to a takeover of telecoms giant BT.

More rebuttals followed. Reliance branded the claims "speculative and baseless".

But there is no denying his desire to bring change to the $208bn (£156bn) conglomerate he has controlled for two decades. The giant behind the world’s largest crude refining operation has branched into Indian telecoms and online retail to sustain its dominance.

Along the way, Ambani has not avoided controversy nor been afraid to throw money at protecting his interests.

In March 2019 he saved his brother, Anil, from jail by agreeing to pay his debts when a contract between Reliance Communications and Ericsson turned sour, owing the telecoms operator £60m.

Some read it as a sign that a long-running feud with Anil was finally over – warring between the pair had been fierce since their father Dhirubhal died without a will in 2002.

Anil (left) and Mukesh Ambani at a shareholder meeting in 2004 - AP Photo/Rajesh Nirgude
Anil (left) and Mukesh Ambani at a shareholder meeting in 2004 - AP Photo/Rajesh Nirgude

The fissure eventually reached Reliance, forcing their mother, Anandiben, to broker a demerger in 2005. It placed Mukesh in charge of oil and gas, petrochemicals and manufacturing, while Anil headed up electricity, entertainment and financial services.

Such legal skirmishes have also stretched to his corporate rivals.

This summer Ambani was pegged back by Amazon when India's Supreme Court upheld a decision to pause Reliance's $3.4bn (£2.6bn) bid to buy e-commerce business Future Retail.

Jeff Bezos' retail empire secured an injunction on the grounds that Future would violate a contract with Amazon if it combined with Reliance.

The tussle between two of the world's richest men prompted Amazon to write a letter to India's competition regulator, urging a volte-face on its approval of the takeover that would secure Ambani a prime position in India's trillion-dollar retail market.

Meanwhile there are signs the Indian billionaire is seeking a European telecoms firm for his overseas trophy cabinet.

Reliance's attempts to buy the Dutch arm of T-Mobile fell flat two months ago when it lost out to the private equity consortium Warburg Pincus and Apax Partners, for €5.1bn (£4.3bn).

As Ambani attempts to diversify, BT is certainly off the menu for the time being following his denial – such comments prevent him making a bid for up to six months under UK takeover rules.

But if it remains in public hands come April, maybe the billionaire will be eager to pick up the phone and buy up his third British treasure.

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