Sunil Mittal’s JLR moment at BT isn’t likely any time soon – if at all

The Tata Group acquired the iconic JLR (which, like BT, was formerly state-owned) from Ford Motor Company for $2.3 billion on a cash-free, debt-free basis in 2008.

Now, Bharti is set to become the largest investor in BT, with just under a blocking stake. Someone who has a blocking stake in a company owns enough of its shares to prevent other companies from buying or controlling it.

The mild-mannered Mittal understands the telecom sector well. With 400 million subscribers, Bharti Airtel is India’s second-largest telecom operator after a price war kicked off by Mukesh Ambani in 2016 edged out other rivals. Ambani and Mittal are being credited with conducting one of the world’s quickest 5G rollouts in India.

Also read: After BT, Bharti may consider more opportunities in Europe

Mittal also understands BT, given the long relationship between the two companies. BT held a 21% stake in Bharti Airtel and two board seats between 1997 and 2001. He also spends considerable time in the UK, where two of his children live.

No takeover on the cards

Is this really Mittal’s JLR moment, though? For now, a full takeover doesn’t seem to be on the cards. Mittal is not taking a board seat at BT, and has said he has no intention of making a formal bid to acquire the company. “We have not asked for any board seat, we have not even applied our mind to that," he told the British financial press. 

The terms of the Bharti-BT deal have not been disclosed but what is known is that under British rules, a full takeover could be challenged by regulators, according to a Financial Times report. Remember, BT retains roughly three-quarters of the UK telecom’s infrastructure through a subsidiary. In fact, the two-step transaction was completed after Bharti secured regulatory clearances, including a UK security clearance, which some newspapers say was undertaken voluntarily. 

Also read | BT to expand India hub, develop premium 5G use cases: CDIO Harmeen Mehta

BT is of course excited about the new, friendlier investor stepping in for the aggressive Drahi, who has built his empire on debt-powered deals and is now under pressure to sell his assets after running out of credit. Before Mittal stepped in, the risk was that Drahi would dump his BT stock in the market.  The stock has recovered since Allison Kirby became CEO in February, but it remains 15% below where it was 15 years ago. 

Drahi has sold his stake to Bharti at a £900-million loss, and it’s likely to prove a good investment by the Indian company. Kirby’s plan to cut costs by £3 billion and investments in building a fibre network should start paying off soon, improving BT’s valuation. 

Incidentally, BT’s head of digital Harmeen Mehta previously worked at Bharti, and Kriby is reported to have pushed hard to secure the deal. British consumers, too, have something to look forward to, given Bharti’s reputation for cost-competitiveness in India and parts of Africa.

Sunil Mittal, KBE

Mittal’s links with the British political establishment are growing, too. Earlier this year he became the first Indian citizen to receive an honorary knighthood under the reign of King Charles III, for services to UK-India business ties. 

He had previously called on the Indian and British governments to close their stalled free trade deal, and met foreign secretary David Lammy, and business secretary Jonathan Reynolds to push for this. He also met Prime Minister Keir Starmer and other cabinet ministers after Labour’s recent victory. 

Also read: Airtel shifts focus, to exit non-core biz for digital growth, says Sunil Mittal

Mittal’s other British interests include the opulent Gleneagles hotel and resort in Scotland, and the less-upscale Hoxton hotel chain, which is run by his son-in-law Sharan Pasricha. Bharti also holds a controlling stake in satellite venture OneWeb following a joint effort to rescue the space-internet pioneer from bankruptcy. 

The investment in BT will elevate Mittal’s profile significantly, but his long-term ambition for the company remains shrouded in mystery.