Business minister Kwasi Kwarteng said on Thursday he was exercising his "call-in power" under the National Security and Investment Act 2021 (NSI) after the UK arm of Drahi's Altice telecoms and media empire raised its shareholding.

The Franco-Israeli entrepreneur bought 12.1% of BT in June last year and raised that to 18% in December, but said he did not intend to make a takeover bid.

Under the December purchase, Drahi was anyway excluded from making a bid for six months. That period ends on June 14.

The purchase triggered a blunt response from Britain at the time, which warned it would intervene if necessary to protect the telecoms group building the country's critical fibre network.

BT Group said it would fully cooperate with the government probe. Altice UK declined to comment.

Shares in BT were down 3.5% at 1245 GMT.

Deutsche Telekom owns around 12% of BT, according to Refinitiv Eikon data, giving two major foreign peers sizeable stakes in Britain's biggest telecoms company.

Altice controls SFR, France's second-biggest telecoms company. Neither Altice nor Deutsche Telekom has significant business in Britain.

The NSI legislation came into force earlier this year, giving the government powers to scrutinise and, if necessary, intervene in acquisitions on national security grounds.

The BT move is the second time this week the government has exercised the powers.

On Wednesday, the acquisition of Britain's biggest microchip factory Newport Wafer Fab by Chinese-owned technology company Nexperia was called in for a full national security assessment.

Asked about the circumstances around the investigations, and whether probes would be opened into other already-completed deals under the powers, Prime Minister Boris Johnson's spokesperson said such processes were private.

"This is not any indication of a change in our approach to welcoming foreign investment, which is a key pillar to our economy and we'll always remain open to business," the spokesperson told reporters.

Kwarteng now has 30 working days to carry out his assessment of Drahi's BT stake.

"It seems reasonable to conclude that the government thinks Altice/BT raises relevant national security issues," Jefferies analysts said, adding they expected BT and Altice UK would have to provide large amounts of documentation to the government.

They noted the market was not counting on an Altice UK takeover to support BT's share price at current levels.

(Reporting by James Davey and Alistair Smout in London and Aniruddha Ghosh in Bengaluru Editing by Jason Neely and Mark Potter)