Altice Secures Over £1 Billion Margin Loan Against BT Stake, Raising Concerns Over Financial Stability

Altice has taken out a margin loan of over £1 billion against its stake in BT, raising concerns about the long-term viability of this investment. The loan underscores a broader issue facing Altice and its billionaire owner Patrick Drahi, who has amassed significant borrowing as he expanded his telecoms empire. Drahi’s 24.5 percent stake in BT was partly funded through substantial loans and financial products, which allow the company to leverage its shares in a complicated financial strategy.

This hefty borrowing comes at a challenging time for Drahi’s business empire, which faces rising debts and increased scrutiny from lenders. Altice has borrowed in an era of low interest rates, leading to a significant expansion from a small cable company to a global telecommunications presence. Now, with concerns surrounding interest rate hikes and a criminal investigation involving one of the company’s co-founders, the stability of its financial setup is being questioned. The overwhelming debt could make it difficult for Drahi to maintain his position in BT in the long run.

While the margin loan adds pressure, lenders of Altice’s loan appear to be less concerned at this stage because it is well backed by the value of BT shares. BT is a large entity within the FTSE 100 index, providing a layer of security for the banks involved in the loan. Just recently, BT has witnessed a change in its share value along with leadership discussions aimed at strengthening its position, which could stabilise the situation going forward. Despite these challenges, Altice has publicly committed to its support for BT and has stated it has no current intention of initiating a takeover plan unless another entity makes a move.