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Billionaire Drahi Makes $3.1 Billion Bet on BT’s Fiber Plan

Altice U.K. bought a 12% stake in BT Group Plc., in a high-profile backing of the company’s plan to expand its high-speed broadband internet network.

The newly created company, controlled by billionaire Patrick Drahi, has agreed to buy 1.2 billion shares of BT, Altice said in a statement on Thursday. The stake, which a spokesman said was acquired over the past few days, had a value of about 2.2 billion pounds ($3.1 billion) as of Wednesday’s close.

Drahi said he’ll use Altice’s expertise in rolling out fiber networks to help BT expand across the U.K. The British company has been looking for a partner to help it build out an extra 5 million fiber optic connections by 2026, opening up its infrastructure to an external investor for the first time. Altice said that it has no plans to launch a full takeover bid for BT.

BT shares rose 2.1% in London trading at 8:12 a.m. on Thursday to 187 pence. The stock has gained 41% so far this year.

BT said in a separate statement that it welcomes “all investors who recognize the long-term value of our business and the important role it plays in the U.K. We are making good progress in delivering our strategy and plan.”

With this deal, Drahi will become the company’s largest investor, holding a stake comparable to Deutsche Telekom AG’s Representatives for BT and Altice declined to comment further on details of the partnership.

BT’s Chief Executive Officer Philip Jansen is looking for ways to share the load of a potentially costly network upgrade after years of shrinking earnings. Jansen has said a nationwide fiber rollout may cost 15 billion pounds.

Still, the company has the support of the U.K. government, which is pushing to expand access to fast internet connections, and Prime Minister Boris Johnson has discussed a subsidy for rural broadband.

The acquisition was through a new entity, Altice U.K., which was established to hold the shares in BT and is separate from the European and U.S. businesses, the company said in the statement.

Source: Bloomberg