Altice NV, the Netherlands-based multinational telecoms company, founded and headed by the Franco-Israeli billionaire Patrick Drahi, and the second largest telecoms company in France, has emerged as another potential candidate for Charter Communications, sources told Reuters on Wednesday
This plan would build more scale in the United States, as a wave of consolidation is expected in the telecom industry as cable companies seek additional ways to cut costs and grow with more U.S. consumers cutting their cords. A deal for Charter would allow Altice’s founder, to bring his business model to bear in the United States. Drahi made his fortune through debt-fuelled acquisitions swiftly followed by cost cutting to boost profits. Altice is working with banks to finance a deal through cash and equity, according to sources.
Altice, presently the fourth-biggest cable provider in the U.S., completed its $17.7 billion acquisition of Cablevision in June 2016, after buying Town and Country-based Suddenlink for $9.1 billion in 2015. Both acquisitions were done through debt, with targeted cost savings of more than $1 billion for both entities.
Financing an acquisition of Charter or a merger of the company with Altice USA would be a major challenge for Mr. Drahi, whose net worth is pegged by Forbes at $14-billion. Even without a takeover premium, Charter is worth more than $180-billion including debt, while Altice NV and Altice USA have almost as much debt as their combined market capitalizations, of €32-billion ($47.8-billion Canadian) and $23-billion (U.S.), respectively.
Altice could have potential competition for Charter; Japan’s SoftBank Group Corp. was also considering making a bid for Charter as early as the end of August, looking to combine the cable company with wireless carrier Sprint Corp., of which SoftBank owns a majority stake.