Altice Seeks to Raise About $1 Billion in IPO

Altice SA, the telecommunications investor founded by entrepreneur Patrick Drahi, plans to raise about 750 million euros ($1 billion) in an initial public offering to pay down debt while continuing to expand.

About 20 percent to 25 percent of the Luxembourg-based company’s shares will be sold with the stock set to begin trading in Amsterdam in about four weeks, Chief Executive Officer Dexter Goei said today on a conference call. Goldman Sachs Group Inc. and Morgan Stanley are the global coordinators and joint bookrunners. Drahi is among the selling shareholders.

Altice, a major shareholder in France’s largest cable operator Numericable SAS, has identified at least 10 potential acquisition targets to bolster its market positions or expand into new regions, Goei said. Altice and billionaire John Malone’s Liberty Global Plc are among investors buying cable and broadband assets in regions such as Europe as data usage grows.

“We are the Liberty Global of the smaller telecoms opportunities today,” Goei said. “One of the reasons we’re going to the capital markets is we’d like to be able to do larger operations.”

The company may raise more funds at a later date if needed to finance deals and paying a dividend is a possibility in the future, Goei said. Other banks managing Altice’s IPO include Credit Suisse Group AG, Deutsche Bank AG and HSBC Holdings Plc.

France, Caribbean

Altice owns and operates cable, mobile, Internet and data-center companies in countries including France, Israel, Belgium and Portugal. The company has a growing business in the French West Indies and Caribbean and agreed to buy Orange SA’s Dominican Republic unit in November for $1.4 billion after reaching a deal for fixed-line operator Tricom SA in the country a month earlier.

Numericable held an IPO last year to raise funds to help finance investments in its infrastructure, marking the largest listing in Paris since December 2009 and a milestone for Drahi, who started Altice in 2002. Numericable shares have gained 10 percent since and fell 0.57 percent to 27.28 euros in Paris, giving the cable company a market value of 3.4 billion euros.

“We believe in the long-term sustainability of cable and it being the best infrastructure that exists,” said Goei, a former Morgan Stanley and JPMorgan Chase & Co. investment banker. “We want to have the best network to expand into markets like mobile, or business-to-business.”

Malone’s Deals

Europe’s cable assets are in demand. Liberty Global’s Malone, the biggest U.S. investor in the region’s cable operators, acquired Virgin Media Inc. last year for $16 billion and is nearing a deal to buy Dutch broadband provider Ziggo NV, people with knowledge of the matter have said. In Spain, Grupo Corporativo ONO SA has said it is also considering an IPO.

IPOs raised about $36 billion on European exchanges last year, more than double the 2012 figure, as issuers including Italian luxury ski-wear maker Moncler SpA and state-run U.K. postal operator Royal Mail Plc capitalized on renewed investor interest in the region, data compiled by Bloomberg show.

With earnings before interest, taxes, depreciation and amortization of about 1.1 billion euros for the nine months ended Sept. 30, Altice gets 45 percent of its Ebitda from France, it said in a media presentation today.

Altice had a total net debt of 6.9 billion euros as of September, the company said in the presentation. The money raised won’t go to Numericable debt.

French Deals?

The company is weighing acquisition opportunities in all of its markets, including France, Portugal, Belgium and Luxembourg, Goei said. Altice’s acquisition strategy will be mainly focused on consolidating its existing positions, he said.

In France, Vivendi SA’s SFR mobile-phone unit or Bouygues SA’s Bouygues Telecom are possible targets, he said. Regulators are open to consolidation in Portugal, and Altice is looking at mobile operators in Belgium and cable in Luxembourg, Goei said.

In France, Numericable said in November a combination with SFR -- which is also weighing an IPO -- makes sense and it’s an option the company might pursue again. Altice was asked if it wanted to buy Royal KPN NV’s Belgian unit, BASE, before the Dutch owner canceled the sale, Goei said.

“We’ve been approached for every asset in the world that’s telecoms oriented,” Goei said. “When we’re looking at new acquisitions, we’re very much looking at undermanaged businesses to drive new geographies. We’re very good at identifying attractive undermanaged assets in attractive geographies and managing them for growth and profits.”

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