Altice Europe in Talks About Fiber Assets

European service provider says it is in talks about fiber partnerships that could speed up network rollout.

Iain Morris, International Editor

October 3, 2018

3 Min Read
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European cable giant Altice says it is exploring financial partnerships that would help to speed up the deployment of all-fiber networks, fueling speculation it may sell fiber assets in a bid to reduce its high level of debt.

The company's statement followed media reports that private equity firms have expressed interest in acquiring fiber assets from Altice, which operates fixed and mobile networks in France, through its SFR subsidiary, and owns Portugal Telecom.

"Altice has undertaken a strategic review of its fiber infrastructure to further accelerate its deployment and is exploring financial partnerships," said Altice in the statement published on its website. "No final decision with respect to any strategic transaction involving its fiber infrastructure has been taken, and it is yet uncertain that any such transaction will be concluded."

The reports and Altice statement buoyed the company's share price, which rose 1.8% in Amsterdam on Wednesday to close at about €2.38 ($2.74). Amid concern about its debt situation, Altice's share price has fallen from a high of €3.52 ($4.06) in late June.

The operator's second-quarter results presentation shows that net debts equaled about €31.9 billion ($36.8 billion) at the end of June, nearly six times the company's annual earnings (before interest, tax, depreciation and amortization).

Debts soared following a takeover binge when Altice was trying to establish itself as one of Europe's big players. Its US arm, which is now a separate entity, has also been expanding though takeover activity.

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Earlier today, Bloomberg News said Altice had attracted bids from KKR, Ontario Municipal Employees Retirement System and Macquarie Group for a stake in its French all-fiber venture. Citing people familiar with the matter, Bloomberg said those bids were for stakes of between 40% and 60% in the business and valued the fiber assets at €1.5-3 billion ($1.7-3.5 billion).

SFR competes against Orange, Iliad and Bouygues Telecom in France's broadband market. All four companies have been rolling out all-fiber networks that provide high-speed connections to business and residential properties but cost billions of euros to build.

Altice has already raised about €2.5 billion ($2.9 billion) by selling stakes in its mobile infrastructure businesses in France and Poland. Even if the entire amount went toward paying off debts, however, Altice's fiscal position would not significantly improve. (See Altice to Sell French, Portuguese Towers for €2.5B.)

Private equity firms have shown growing interest in telecom assets as a dependable, recurring source of revenues. Investment activity in the fiber sector has been fueled by the soaring usage of data services, as well as the emergence of higher-speed mobile technologies that use fiber lines for "backhaul" -- the connections between basestations and core network systems.

— Iain Morris, International Editor, Light Reading

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About the Author

Iain Morris

International Editor, Light Reading

Iain Morris joined Light Reading as News Editor at the start of 2015 -- and we mean, right at the start. His friends and family were still singing Auld Lang Syne as Iain started sourcing New Year's Eve UK mobile network congestion statistics. Prior to boosting Light Reading's UK-based editorial team numbers (he is based in London, south of the river), Iain was a successful freelance writer and editor who had been covering the telecoms sector for the past 15 years. His work has appeared in publications including The Economist (classy!) and The Observer, besides a variety of trade and business journals. He was previously the lead telecoms analyst for the Economist Intelligence Unit, and before that worked as a features editor at Telecommunications magazine. Iain started out in telecoms as an editor at consulting and market-research company Analysys (now Analysys Mason).

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