BT itself bought £80 million worth of its own shares from Orange today.
Orange said this morning: “Following the share placement, Orange will no longer be shareholder of BT Group plc and will no longer have any exposure to the shares of BT Group plc, having recently fully hedged its exchangeable bonds into BT Group plc shares issued in June 2017.”
The move comes nearly three and a half years after BT bought UK mobile operator EE, until then a joint venture of Orange and Deutsche Telekom, in a deal valued at £12.5 billion that closed in January 2016.
At the time Orange decided to take 4% in shares and the rest in cash, while Deutsche Telekom took a 14% stake – and is now BT’s largest shareholder, with Tim Höttges, CEO of the German incumbent, a non-executive director on the board.
Two years ago Orange planned to reduce its stake from 4% to 1.33% in order to reduce its exposure to the UK company’s falling share price, but in the end held on to 2.5%. Today, two years and one week after that decision, it has cashed out its remaining stake.
BT’s shares have fallen in price steadily since November 2015, when they were £4.99 each, to today’s level of £2.01. They were still around £4.84 in late January 2016 when Deutsche Telekom and Orange first became shareholders.
But their value to the two European shareholders has fallen by even more. They are both in the Eurozone, and in January 2016 the pound was worth $1.31; following Brexit and the slump in the UK economy the pound today is worth €1.11.
That means a BT share in late 2016 was worth €6.34; today’s BT share is worth €2.23 – just 35% of its value three years ago.
Deutsche Telekom’s attitude to its stake in BT remains a mystery. Before the completion of the EE sale in early 2016 a well-placed source told Capacity that Höttges would become a non-executive director of BT – something that BT officially denied at the time – and that as soon as possible Deutsche Telekom would seek to buy BT.
Under the original acquisition deal, Deutsche Telekom was unable to increase or reduce its stake in BT until January 2019, but in the five months since then it has given no indication of its plans.
However a year before that date, Höttges told Capacity at Mobile World Congress in Barcelona that BT was “a very attractive company”, and he praised BT’s fixed and mobile integration strategy as well as its content strategy.
