BT Group Shares Rise Following Bharti Global Investment

Shares of BT Group Plc saw a significant increase after Bharti Global, the international division of Indian telecom leader Bharti Enterprises, announced its agreement to purchase a 24.5% stake in the company.

As of 5:11 am (0911 GMT), BT Group’s stock rose by 6.1%, trading at £138.45.

The acquisition will occur in two stages: an initial purchase of a 10% stake from Patrick Drahi’s Altice UK, followed by the acquisition of the remaining 14.5% after obtaining the necessary regulatory approvals.

This transaction falls under the UK government’s National Security and Investment Act 2021, which empowers the government to review and potentially intervene in acquisitions that could pose national security risks.

Analysts at Citi Research noted that given the government’s prior approval for Altice’s stake increase in BT from 12% to 18%, the regulatory challenges are likely minimal.

Citi Research has set a target price of £2.00 for BT Group, derived from a Discounted Cash Flow (DCF) model that uses a Weighted Average Cost of Capital (WACC) of 8.0% and assumes a 0% perpetuity growth rate starting from the fiscal year 2027.

While Bharti Global’s investment is viewed positively, there are still several risk factors to consider. These include the size of BT’s pension fund, the threat of network overbuilding, the potential for new competitors in the quad-play market, and BT’s vulnerability to single-country and regulatory risks.