BT shares hit a one-year high recently after Mexican billionaire Carlos Slim bought a 3% stake through his family holding company, says Leah Montebello in This is Money.
Slim is the “latest high-profile investor”, alongside billionaire telecoms tycoon Patrick Drahi and Germany’s Deutsche Telekom. The backing from one of the world’s richest men may be seen “as a vote of confidence” in CEO Allison Kirkby, with BT’s value now 20% higher since her arrival in February.
But Slim’s motives for buying are “unclear”. Kirkby’s “short-busting” strategy of upping BT’s dividend and making promises about its future free cash flow may have attracted Slim’s attention, says the Lex column in the Financial Times.
Try 6 free issues of MoneyWeek today
Get unparalleled financial insight, analysis and expert opinion you can profit from.
Start your trial
Sign up for MoneyWeek’s free twice-daily newsletter.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Or he may be after “the stability of a utility’s cash flow”; it looks as if “group capital expenditure has peaked”. Either way, less affluent BT shareholders “might take heart from Slim’s interest”, given that there is “scant evidence that the doubters have taken flight”: BT’s return, including dividends, has lagged the FTSE 100 by 11% over a year. Slim’s investment also provides insurance against the possible departure of the “cash-strapped” Drahi, who owns nearly a quarter of BT.
Latest Videos FromMoneyWeek
Experts think that Slim’s investment is most likely to be “an opportunistic strategic investment aiming to capitalise on BT’s still fairly depressed share price”, says James Warrington in The Telegraph. But it could also be “a beachhead to taking a stronger position” in the stock. He has been behind failed takeover bids at Dutch telecoms firm KPN, Telecom Italia and Portugal Telecom.
What’s more, it is only the latest example of a foreign billionaire “snapping up shares in British telecoms giants such as BT and Vodafone”. At the very least, this “string of foreign billionaires on share registers means change could be on the horizon – and bosses will have to be on their guard”.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
