SUDDENLINK-ALTICE Altice enters U.S. cable market with Suddenlink acquisition

Record ID: 154717

  • Title: SUDDENLINK-ALTICE Altice enters U.S. cable market with Suddenlink acquisition
  • Date: 20th May 2015
  • Summary: PARIS, FRANCE (MAY 20, 2015) (REUTERS) SIGN READING "SFR" EXTERIOR OF SFR BOUTIQUE (SOUNDBITE) (English) REUTERS TELECOM SPECIALIST, LEILA ABBOUD, SAYING: "Altice is buying a small cable company in the U.S., it's the seventh largest player in the U.S., and it's part of their ambition to expand overseas. Altice, which is owned by a billionaire named Patrick Drahi, has been
  • Embargoed: 4th June 2015 13:00
  • Keywords:
  • Location: France
  • Country: France
  • Topics: General
  • Reuters ID: LVADPZWVWBE50BVTJ306YS6MKRRK
  • Aspect Ratio: 16:9
  • Story Text: European telecoms group Altice agreed on Wednesday (May 20) to buy U.S. regional cable company Suddenlink Communications in a $9.1 billion deal, marking its first move across the Atlantic where it is also interested in buying Time Warner Cable.
    The surprise move is further evidence that Patrick Drahi, Altice's billionaire founder, wants to build an empire in cable and mobile after doing four major deals last year alone.
    But few expected the 51-year-old tycoon to target the U.S., analysts said, since it seemed more likely that Altice would seek to consolidate its existing markets, namely France or Israel, to create larger cost savings more quickly.
    "Altice is buying a small cable company in the U.S., it's the seventh largest player in the U.S., and it's part of their ambition to expand overseas. Altice, which is owned by a billionaire named Patrick Drahi, has been doing a lot of deals in the past 18 months. He has bought four companies in the past year alone, and this is the first time he is going to the U.S. So it's pretty surprising, people were not really expecting to see him do this and now the market is just trying to figure out what it's all going to mean," said Reuters Telecom correspondent Leila Abboud.
    She added that in addition to Suddenlink, the U.S.'s seventh largest cable player, Altice has also approached number two Time Warner Cable over a deal.
    "Sources recently just this morning told Reuters that the Suddenlink deal doesn't change Drahi's interest in Time Warner cable, he is still interested in that company so we'll see where it goes from here. But I think you can expect Altice led by Drahi to do more acquisitions," Abboud said.
    With a market value of $44.5 billion, TWC would be a big bite for Altice, which has a market value of about $30 billion.
    Despite the size of a potential deal, Altice's offer for TWC is expected to be mainly in cash rather than shares, the source added.
    Altice shares were 7.7 percent higher at 124.45 euros midday, hitting all-time highs, Abboud said.
    "The market loves Patrick Drahi and it loves Altice. The shares are up seven or eight percent today. So far since the company went public in January of 2014 and since then the shares have only gone up," she said.
    Suddenlink has 1.5 million residential and 90,000 business customers in the U.S., spread largely over Texas, West Virginia, Louisiana, Arkansas and Arizona.
    Its sales grew 6 percent last year to $2.3 billion and operating profit grew at a similar pace to reach $905 million.
    Drahi's Altice is expected to apply its usual formula at Suddenlink, namely aggressive cost cuts and attention to profit instead of volume of customers. The strategy is starting to pay off at Altice-backed French cable company, Numericable, which bought the country's second-largest mobile carrier, SFR, last year.
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