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Several big names in the investment community are reportedly in the running to buy into Altice's fibre business in France.
February 12, 2024
So reports Bloomberg, whose sources put KKR and Macquarie on the short list for Altice's XpFibre unit, while also listing pension fund Caisse de Depot et Placement du Quebec (CDPQ) and Global Infrastructure Partners as potential suitors.
Altice has been shop windowing its various businesses for the past six months or more as part of a serious deleveraging push. The French firm needs to make more than a dent in its oft-mentioned US$60 billion debt pile and selling off its fibre operations in its home market could help it do that.
A French fibre operations sale might seem like an odd move for a company that it is in the process of ploughing significant amounts of money into fibre network rollout just over the border in Germany. Altice acquired half of Vodafone's fibre operations in Germany around this time last year and the pair said they would invest €7 billion in FTTH network deployment over six years, the total partly financed by debt. Their OXG Glasfaser joint venture broke ground in September.
While bailing on the French fibre space while at the same time investing in the technology in Germany seems counter-intuitive, it might be that Altice doesn't have as much choice as it would like in the matter. It needs to sell assets to reduce its debt burden, and – logically – it needs to sell assets that investors are actually interested in to secure the best returns.
As Bloomberg notes, the sale of a minority stake in French mobile operator SFR is an option, and it doubtless would generate a few euros for Altice, but investors have shown more interest in the fibre assets.
Its sources didn't have much more to say on the matter, other than to add the usual caveat that ongoing negotiations might not result in any deal and to point out that other bidders could still emerge.
However, it did give us some idea of the value of the business. Altice owns 50.01% of XpFibre, with the remainder in the hands of a consortium majority-led by OMERS Infrastructure that also includes Allianz Capital Partners and AXA IM Real Assets. The consortium bought in for €1.7 billion in 2019, valuing the unit at €3.4 billion, it said.
Plenty has changed in the past five years, particularly in the financial markets, but nonetheless, the figures give us an idea of the size of deal we could be looking at. Essentially, a figure that would help Altice with its deleveraging plans.
Last year Altice's owner Patrick Drahi said his company was looking to bring in around €3 billion through the sale of assets to help reduce debt. In November the firm announced that it would set up a new business for its data centres, known as UltraEdge, that it valued at €764 million and had agreed to sell off a 70% stake to Morgan Stanley.
That was a good start, but left Altice some way off its €3 billion target. Any fibre sale could bring in a similar amount or more. Given the sense of urgency Drahi expressed last year, there could be news of a deal sooner rather than later. And it may well not be the last asset sale we see from Altice.
Mary has been following developments in the telecoms industry for more than 20 years. She is currently a freelance journalist, having stepped down as editor of Total Telecom in late 2017; her career history also includes three years at CIT Publications (now part of Telegeography) and a stint at Reuters. Mary's key area of focus is on the business of telecoms, looking at operator strategy and financial performance, as well as regulatory developments, spectrum allocation and the like. She holds a Bachelor's degree in modern languages and an MA in Italian language and literature.
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