One billionaire's $60 billion debt problem provided an opportunity for another billionaire to capitalize on it.
Telecom's JLR moment stunned the business fraternity in India and Britain this week. In a turning point in history, Sunil Mittal raided on Monday to take a quarter of BT (earlier British Telecom) and became its largest shareholder. In the process, he renewed ties with the telecom giant — a former monopoly in Britain — nearly three decades after it took a 21% stake in its Indian telecoms business, now dubbed the $100 billion behemoth Bharti Airtel.
But after years of strategic missteps, operational challenges and an ailing stock price that fell 22% in the two-year period in which Patrick Drahi's company Altice increased its stake, Mittal will have to show much more of his entrepreneurial spirit than just his $4 billion check to engineer a turnaround that will satisfy his vociferous shareholders.
To be fair, Mittal’s 48-year entrepreneurial journey — from bicycles to Bharti and now BT — has seen its fair share of tumult. Yet he’s always been a fierce competitor, resilient enough to think ahead. Before his local peers were talking about payments, he was inspired by M-Pesa’s mobile money in Africa and tried to replicate it until regulations got in the way.
Even when most of his peers were writing him off for the Mukesh Ambani-led Reliance Jio steamroller, he didn’t throw in his cards. Instead, he helped Ambani by sharing his telecom infrastructure for their test drives. Mittal suffered losses when competitors started offering free services for almost three years — operating cash flows in FY19 fell to negative $910 million, before rising to $3.1 billion over five years. EBITDA from India operations also grew 2.7 times over the same FY19-FY 24 period.
Along the way, Mittal has forged long-lasting alliances and groundbreaking partnerships – from bringing in PE poster boy Warburg Pincus, telecom giants Singtel and Vodafone and Walmart, to the Rothschild family, Dutch insurer Axa and Masayoshi Son and even Sundar Pichai. Mittal himself admits that even after BT spun out of Bharti in 2001, he continued to hold discussions with BT management, “with every successive CEO in the business since then”. It’s no surprise then that Moroccan-born, French-Israeli telecom-media-art-house magnet Drahi – with his collection of Chagalls, Monets and Rothkos – sought him out. It was a career marker too hard to resist. If timing is everything in business, then joining the elite sport of owning large chunks of an iconic telecoms group on the cusp of a structural return to growth is also a smart business move. Bharti Airtel and BT have similar balance sheets, with each reporting EBITDA of around $10 billion in FY24.
BT posted higher revenues of $26.3bn. But it has long been a laggard in the Stoxx European telecoms index, with EV/EBITDA of 5.2x March 2025 with a dividend yield of 6.3%. Mittal’s ‘trust capital’ will finally provide stability. The shares rose 8.4% to 141.5p on Monday.
The potential for a huge future upside is real. Six months into her role, BT CEO Allison Kirkby has unleashed a £3bn cost-cutting drive. Yet last year, around £5.3bn was invested to bring fibre to every home and office across the island and prepare for the future. A further £4.8bn is being invested this year. Once the cycle is complete, free cash flow should almost double from the current £1.6bn, even if business doesn’t necessarily show a huge increase. A boost in dividend flow and yields is expected to follow.
British telecoms, like Bharti, are fundamentally built on mobile, home broadband and enterprise services. But the network, maintenance and customer-facing processes can also have a positive effect on Airtel’s business, just as BT can lean on its template of using scale to drive efficiency and smooth out signal outages.
On a personal level, the alliance with some of the biggest operators — Germany’s Deutsche Telekom (12%) and Mexican tycoon Carlos Slim (3%) — will further cement Mittal’s global position in the industry. But they will now all have to ensure that the company’s large group of investors, who are still suffering heavy losses, see better connectivity. BT has had deep-rooted, savvy shareholders. Yet previous buy signals have only created static disruptions. With all his clout at Westminster, Mittal, a long-term British bull who received an honorary knighthood earlier this year, will hopefully bring a nice ring to this reunion.
And with two of his three children and son-in-law now based in the UK, running a range of business ventures from bespoke hospitality to the revived One Web’s space internet venture, we can also see a bigger role for Mittal Gen Next. Son Shravin, a former Softbank executive, brought in the BT deal.
