Altice USA has not officially hung a "For Sale" sign on Lightpath, its fiber-based offering for larger business customers, but it has confirmed that it is analyzing its options.
Altice USA has "been pretty open that we are reviewing the Lightpath asset and doing work internally to see whether anything makes sense strategically to do with that asset, as we basically do with all of our assets on a continuous basis," Altice USA CEO Dexter Goei said on Thursday's Q4 earnings call, according to this Seeking Alpha transcript. That was in response to an analyst's question about whether the company was thinking about strategic options for Lightpath or selling off IRUs (indefeasible rights of use, or permanent/long-term contracts) with respect to that unit.
The question came up amid speculation that Altice USA is getting close to announcing it will explore the sale of the Lightpath business, with Cowen & Co. predicting that the company could get as much as $4 billion in pre-tax proceeds from such a sale. Cowen & Co. views infrastructure funds, such as ZenFi, OCG and Conterra, as the most likely suitors for Lightpath if it did hit the market, along with some potential for the likes of Crown Castle, Charter Communications and CenturyLink to swoop in.
Later in the call, Goei acknowledged that Altice Europe has had some success monetizing some of its fiber assets. He also noted that the Lightpath asset is "call it, less core to the overall business today" for Altice USA.
"We clearly are keeping our ears and eyes open as to the trends on valuations and how people are thinking about pricing their capital in that space, which is one of the reasons obviously that, if we were to look at monetizing some or all of Lightpath assets, it's because it becomes very attractive for shareholder value creation," he said.
Analysts covering Altice USA believe that a sale of all or part of Lightpath would serve as a catalyst to the stock. A divestiture of Lightpath could also add to the business services revenue growth rate at Altice USA, which, at 5.3% year-over-year, is slower than the company's peers, mainly due to the fact that the company (going back to the Cablevision Systems days) has been in the commercial services market longer than other US cable operators, Craig Moffett, analyst with MoffettNathanson, explained in a research note.
Shares in Altice USA were up 2.76% (58 cents) to $21.60 each in Friday morning trading.
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— Jeff Baumgartner, Senior Editor, Light Reading