Carlos Slim’s BT stake may just be a prelude

America Movil SAB de CV

14/06/2024 08:30

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are his own.)
    By Pierre Briancon
       LONDON, June 13 (Reuters Breakingviews) - As New York
Times stakeholders discovered during the global financial
crisis, Carlos Slim has an eye for a bargain. The Mexican
billionaire and controlling owner of Latin America’s $52 billion
telecommunications group América Móvil  AMXB.MX  just spent $520
million to acquire a 3% stake in BT  BT.L . He is joining the
crowd of investors encouraged by the $17 billion UK telco’s
latest results, and confident that new CEO Allison Kirkby has
started to turn around the once-beleaguered group.
    Slim’s BT interest looks like a straightforward equity punt.
The group's shares, which rose 3% on news of the Mexican’s
arrival, are up by more than 25% since Kirkby announced a month
ago a major improvement in free cash flow thanks to lower
capital expenditure and strong cost cuts. But they are still
only trading at the level of a year ago, 30% below their
pre-pandemic price. And analysts surveyed by the group have an
average 195 pence target for the shares, 46% above BT’s current
level.
    Slim is unlikely to intend to launch a full bid for BT, for
two reasons. The first is he might not be welcome in the UK,
where a security review would be launched if he wanted to take
control of the group. Governments throughout Europe have been
keen to keep their major telcos under domestic control. The
second reason is the memory of Slim’s failed attempt in 2012 to
take control of KPN  KPN.AS , the Dutch group, against the wish
of the government.
    Slim however has scope to increase his stake in BT.
Germany’s Deutsche Telekom  DTEGn.DE  is nursing a 3.5 billion
pound paper loss on its 12.5% stake since receiving it as
payment for its share in EE, the UK mobile operator sold to BT
in 2016. It may want to wait for better times before deciding on
a disposal. Patrick Drahi, owner of a 24.5% stake, on the other
hand has a $60 billion debt problem. He might be happy to sell
all or some of his holding, now worth 2 billion pounds after the
recent weeks’ bump.
    For the Mexican mogul, that wouldn’t be quite the same as a
full takeover. But given his experience in Europe, that may be
no bad thing.
    Follow @pierrebri on X
    
    CONTEXT NEWS
    Mexican magnate Carlos Slim has taken a 3.16% stake in BT,
Britain's biggest broadband and mobile operator, according to a
stock market filing on June 12.
    The stake bought by Slim, whose family controls
telecommunications giant América Móvil, has a market value of
about 408 million pounds ($522 million), based on BT's closing
share price on June 12.
    BT shares were up 3% in London to 133 pence as of 1052 GMT.

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 (Editing by George Hay and Streisand Neto)
 ((For previous columns by the author, Reuters customers can
click on  BRIANCON/ 
pierre.briancon@thomsonreuters.com))