Altice Europe has been present in Portugal since 2015, when it acquired the domestic operations of Portugal Telecom from Brazilian operator Oi in a €7.4 billion deal. Since then, the Patrick Drahi-owned operator has been providing fixed and mobile services under the MEO brand, competing with NOS and Vodafone Portugal.

Altice recently shifted its focus to the UK market, buying and then increasing its stake in BT, the UK's national incumbent. With 18% of shares, compared with 12.1% previously, Drahi is now the operator's largest single shareholder by some measure.

It remains to be seen whether or not Drahi will buy more of BT. For example, there have been suggestions that he could snap up the 12% stake in BT held by Deutsche Telekom – a move that would give him 30% of the UK operator and set him up for a takeover bid.

Figure 1: Where to next: Could the failure to sell MEO in Portugal affect Patrick Drahi's chances of buying more of BT?
(Source: Ecole polytechnique on Flickr CC 2.0)

Such rumors were fueled by reports that Drahi had put MEO up for sale in the hope of raising a few billion euros – at least €7 billion (US$7.86 billion) to be precise – to refill Altice's depleted coffers. However, it's now being reported that Altice Europe has abandoned plans to sell MEO because no one was prepared to pay the price that Drahi wants.

The price is not right

According to Reuters, Altice Europe dropped the plan to sell its Portuguese business after private equity bids failed to meet price expectations.

Sources told the news agency that during December, Altice was locked in a valuation row with buyout funds EQT and CVC Capital Partners, as non-binding proposals came well below the €7 billion threshold.

Indeed, the highest bid was reportedly just over €6 billion. Reports said rivals Telefonica and MasMovil thought MEO was too expensive and would not submit a bid.

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It seems that discussions have been behind closed doors and have remained informal. Indeed, Altice has apparently always denied that MEO was up for sale. The group is said to have hired Lazard last year to test market appetite for its Portuguese business, but never launched a formal auction process.

The suggestions are that MEO has become less attractive after flogging off some key infrastructure assets.

For example, in 2019 it sold 49.99% of its fiber unit to Morgan Stanley Infrastructure Partners. In 2020, MEO and Morgan Stanley created Fastfiber as a new entity for the wholesale fiber business.

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— Anne Morris, contributing editor, special to Light Reading