Altice Said to Weigh IPO of U.S. Cable Unit to Spur Growth

  • Other options said to include raising capital at parent level
  • Drahi’s Altice bought Cablevision, Suddenlink in past year

Patrick Drahi’s Altice NV is considering options to raise money for expansion in the U.S., including an initial public offering of the cable-TV business it created by buying Cablevision Systems and Suddenlink, according to people with knowledge of the situation.

An IPO of Altice USA is one option, said the people, who asked not to be identified because the plans are still in flux. Others being considered are raising more capital at the parent level of Altice, or more borrowing, one of the people said. No banks have been hired.

"We are focused on execution; we do not plan anything else at this stage," Arthur Dreyfuss, head of communications at Altice, said in phone interview.

New equity would give Drahi, the acquisitive French-Israeli billionaire, fuel to grow further in the U.S. while easing the impact on Altice’s balance sheet. The Dutch company spent more than $26 billion in the past year to establish a U.S. cable-TV presence, following the 2014 combination that formed SFR Group, France’s second-largest telecom company. Altice had 54.6 billion euros ($59.6 billion) in long-term debt at the end of June, and has been refinancing to extend maturities.

Separate listings for U.S. and French assets would allow Altice to finance business and pursue distinct strategies in each country, according to Ameet Patel, an analyst at Northern Trust Capital Markets. A U.S. IPO would signal Altice intends to keep rolling up assets there, while allowing the company to participate later in consolidation in France.

“The details about how various entities will be listed remain to be seen -- but ultimately it should offer a cleaner choice for equity investors,” Patel said in a research note. “Nearer term, it could mean an implied valuation of a combined entity that is higher than where the stock trades today.”

Altice gained 3.1 percent to 17.45 euros at 1:44 p.m. in Amsterdam, on track for its highest close in a year, while SFR advanced 1.3 percent to 24.92 euros in Paris.

The U.S. IPO talks were reported earlier by Reuters.

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