Published: Wed, January 10, 2018
World | By Melba Underwood

Europe's Altice boosted by plans to spin off United States operation

Europe's Altice boosted by plans to spin off United States operation

Analysts at brokerage Raymond James said Altice's European arm could become an acquisition target for rival French telecoms companies.

By 1015 BST, Altice shares were trading 5.92% higher at €10.00.

No new executive recruitment was announced, however, with Altice remaining managed by the same close team that has seen it transform from a small France-based company into a global group.

"The separation will allow both Altice Europe and Altice USA to focus on their respective operations and execute against their strategies, deliver value for shareholders, and realize their full potential", said Altice founder Patrick Drahi.

Drahi said he will serve as president of the board of Altice Europe and chairman of the board of Altice USA.

Altice shares were trading higher Tuesday, on news the telecoms and cable firm will reduce its debt by separating its United States and European businesses.

Altice, whose operations stretch from Israel to the Dominican Republic, saw its shares plummet after a financial report signaled it would fail to grow in France in 2017, despite large investments in mobile and fixed networks.

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Altice's performance in Europe previous year led investors to question its strategy, and in November founder Patrick Drahi returned as president while Chief Executive Michel Combes resigned.

The spinoff represents a reversal of Drahi's original vision for a single broadband operator spanning portions of North America and Europe, after Altice spent $17.7 billion in 2016 to acquire Cablevision, whose Optimum unit provides cable TV and broadband service in much of southwestern CT and the metropolitan New York City region.

Telecoms and cable group Altice NV, which is trying to cut debts of around 50 billion euros ($59 billion), said on Monday its board has approved plans to spin-off its USA unit.

The US business, no longer owned by Altice NV, would be shielded from concerns about the European operation, while a parting US$1.5 billion dividend payment will improve the balance sheet of the European arm. "That should solve their "guilt by association" problem", Moffett said.

In advance of the spinoff, Altice USA approved a $1.5 billion cash dividend to all Altice USA shareholders immediately prior to completion of the separation it aims to complete by the end of the second quarter, funded by debt secured by Optimum.

Altice is also hoping to raise as much as 3 billion euros from the sale of its Dominican Republic business, sources told Reuters in November.

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