French cable giant Altice has opened its wallet again in an effort to take total control of SFR, the second-largest network operator in France, and to acquire two partners that provide it with network and customer care support solutions. The moves are part of the company's efforts to introduce a centralized operational model that, using slightly unsettling terminology, it is calling the "Altice Way."
Altice is to buy the 22.5% of SFR it currently doesn't own in a stock transaction (using newly issued shares) valued at about €2.4 billion (US$2.68 billion). The deal has been agreed by the boards of both companies and is expected to close in the fourth quarter.
In addition, Altice is buying Parilis SA, its preferred network systems integration services supplier, and Intelcia, a call center operator. Financial details for those two deals were not made public.
Altice has been on a spending spree during the past few years: It acquired its controlling stake in SFR in late 2014 for $16.7 billion and then merged it with its existing French cable operation, Numericable; expanded its European asset base with the $8.4 billion purchase of Portugal Telecom in mid-2015; and then shifted its attentions across the Atlantic to become a major cable industry player with the acquisition of a 70% stake in Suddenlink and a 70% stake in Cablevision, which is now known as Altice USA. (See Altice Closes On Cablevision, Altice Passes Final Cablevision Test, Altice Boasts US Cable Progress, Altice Confirms $17.7B Bid for Cablevision and Altice to Buy Suddenlink in $9.1B Deal.)
Now Altice, which is controlled by French-Israeli billionaire Patrick Drahi, wants to simplify its ownership and management structure -- hence the bid for the remainder of SFR -- and implement the Altice Way by making "its core strategic, operational and technical capabilities available to its subsidiaries in a more centralized manner to maximize the powerful impact on their operational and financial performance." Taking control of Parilis and Intelcia will help it achieve its goals, which include the use of IT platforms and a focus on digitalization to improve customer relationship management.
The main core tenets of the Altice Way are:
- Improving network quality, upgrading and building out very high speed communications networks
- Improving customer relationship management and maximizing customer experience, notably by leveraging efficient IT platforms, focusing on digitalization and simplifying processes
- Leveraging Altice's international media and content organization as part of its global ambition of convergence
- Delivering to its customers the best news channels, the best sport content, the best documentary programs and creating the best series and movies
- Delivering key technology services and market-leading Research and Development through Altice Labs, promoting innovation and transforming technical knowledge into marketable competitive advantages (including the creation and monetization of world-class data analytics)
- Developing, launching and integrating new products, services and business models, including the creation of next-generation communications access and content convergence platforms with market-leading home hubs
- Leveraging branding and marketing synergies
- Selecting strategic suppliers and improving technical and commercial negotiations with the same including through centralized procurement to leverage Altice's global scale
As part of its efforts to deliver the best TV and video content to all of its 50 million customers spread across Europe, the US, Israel (pay-TV operator HOT) and French overseas territories, the ambitious operator, now headed up by group CEO Michel Combes, also plans to launch Altice Studios (to "create original movies and series") and the Altice Channel Factory (to "create more new channels").
Investors were unruffled by the news, as Altice's stock gained 1% to hit €15.62 in morning trading on the Amsterdam exchange.
Altice has benefited from its expansion into the US but is facing financial and competitive pressure in France and, as part of its restructuring and centralization, is likely to review its staffing levels as it seeks ways to cut its operating costs. (See Altice Stock Soars After Profits Grow.)
— Ray Le Maistre, , Editor-in-Chief, Light Reading