The Indian telecoms tycoon acquired 24.5% share in BT Group last year and will now gain greater insight and influence – shares fell more than 4% at news of their appointments
Sunil Bharti Mittal, Founder and Chairman of Bharti Enterprises, and Gopal Vittal, Vice Chairman and Managing Director of Bharti Airtel, are to join the Board of BT Group as non-independent non-executive directors. This will give the pair greater insight and input into the running of BT.
Shares dropped by more than 4% when the news broke. In a press statement, BT Group said: “In connection with Bharti’s shareholding in BT Group and the appointment of Sunil and Gopal to the Board, BT Group and Bharti Global have entered into a relationship agreement.”
Terms of the agreement
Under the terms of this agreement, Bharti Global can nominate two people to sit on the Board as representative directors for so long as it and its affiliates hold a 20% or more stake in the group.
Bharti Global can nominate a single person to be appointed to the Board as a representative director if its shareholding falls to less than 20% but more than 10%.
Last year the Indian billionaire Mittal bought a 24.5% share of the British operator, increasing the shareholding in stages, from the struggling French-Israeli telecoms tycoon Patrick Drahi. Mittal has said he views this stake as strategic and could take a bigger share in future. Bharti Mittal has said he does not rule out acquiring a larger stake in future.
Vittal is MD of Bharti Airtel, Mittal’s Indian operator, which has proved a wily and successful competitor to Reliance Jio. Jio shook the Indian market to the core, signing up 50 million customers for its 4G-only service in 83 days after its launch on 5 September 2016.
Bharti Airtel is among the world’s largest mobile operators, with more than 600 million customers in India and 14 African countries.
Standstill restriction is key
The Relationship Agreement contains a standstill restriction, in keeping with the UK’s National Security and Investment Act 2021, as it applies to BT, and the City Code on Takeovers and Mergers), as well as orderly market, termination and other customary provisions. This includes “the requirement for any transaction between the parties to be entered into on an arm’s length basis”.
In other words, although all appears to be sweetness and light between BT and Bharti at the moment – BT’s CEO Allison Kirkby and Bharti Mittal are said to have a close relationship and she reportedly visited the Indian operator’s HQ earlier this year – the standstill restriction prevents and hostile actions against BT, such as a hostile takeover.
BT’s shares have risen by about a third in the last year to 200.8 on 15 September, valuing the company at about £19.6 billion.
