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‘Altice could dial up growth in the US with Charter’
Posted on Thursday, 10 August 2017 11:54
Altice is believed to be considering joining the fray for Charter Communications in a move which could see the European cable-to-mobile giant go head-to-head with the likes of SoftBank of Japan or Verizon.
CNBC first reported the news the company headed by French billionaire Patrick Drahi and its US cable arm are in the early stages of building an offer for the Connecticut-based group currently worth USD 103.39 billion in the stock market.
Sources with knowledge of the matter told the channel while Altice is working with bankers and lawyers, it has not yet tabled its proposal and noted any bid would be up against significant hurdles.
Charter’s largest shareholder, Liberty Broadband, said in quarterly earnings call yesterday that it would not reject an approach out of hand.
However, if suitors want support then a deal would need to have real value and show new capabilities and cannot be just more leverage – both Softbank and Altice would need to borrow heavily for any offer, according to the media.
Reuters noted Drahi would be up against it in terms of finding finance as, even without a premium, Charter is worth over USD 180.00 million including debt.
Meanwhile, Softbank’s Sprint had a capitalisation of USD 32.85 billion, as of yesterday, which almost matched long-term debt of USD 35.88 billion, as at 31st March 2017.
Similarly, Altice USA had total debt of USD 22.84 billion as of 30th June 2017 and was worth USD 22.92 billion when the bell rang.
Craig Moffett, an analyst at MoffettNathanson, told Bloomberg neither Verizon, SoftBank or the mooted European suitor have the balance sheets needed to produce an offer that would be more attractive that Charter’s plan to continue as it is.
There have been some high-value mergers and acquisitions within the US telecommunications industry in recent years, according to Zephyr, the M&A database published by Bureau van Dijk.
Just last year Charter acquired Time Warner Cable and Bright House while Altice USA, which went public in June 2017, took over Cablevision Systems.
© Zephus Ltd