French cable/mobile group Altice continues to buy and sell assets round the world. It has acquired a 12.1% stake in UK incumbent BT for a reported $3.1bn, becoming the telco’s largest shareholder by a whisker (it has 0.1% larger stake than Deutsche Telekom, whose holding in BT came about when the latter acquired EE, formerly a UK joint venture between DT and Orange).
Altice chairman Patrick Drahi assured the BT board that this was not the prelude to a hostile takeover bid, and meanwhile, he seems to want to offload some other assets to help meet the bill for BT. In particular, Altice Europe is said to be looking for buyers for its Portuguese business, though the reported price tag of €6bn looks very high, as it would be 7-8 times the unit’s annual core earnings, which are not growing.
The French firm has already sold off substantial Portuguese assets and is looking to exit the market, according to Reuters, but it still owns the largest landline operator in the country, MEO, and could attract the interest of one of Spain’s operators, especially MásMóvil, if the price is reduced. Altice already sold 75% of Towers of Portugal (TOP) in 2018 to Morgan Stanley Infrastructure Partners and Horizon Equity Partners, and a 49.99% stake in its Portuguese fiber network to Morgan Stanley Infrastructure Partners for €2.3bn in 2019.
MásMóvil owns cable TV operator Nowo in Portugal and would benefit from the favorable regulatory conditions that will be afforded to new entrants in the forthcoming 5G spectrum auctions. The operator is controlled by Cinven, KKR and Providence, and is known to be keen to expand in both Spain and Portugal. It has mounted a €1.2bn takeover bid for regional Spanish operator Euskaltel.
The new stake in BT, meanwhile, was announced as the BT Sport wing was supposed to be finding a new buyer. Fiber is the primary attraction, although Altice is no stranger to the value of the triple and quad play bundle.
Drahi commented, “BT has a significant opportunity to upgrade and extend its full-fibre broadband network to bring substantial benefits toms of households across the UK. We fully support the management’s strategy to deliver on this opportunity. We understand that the expansion of the broadband network is one of the UK government’s most important policy objectives and a core part of its levelling up agenda.”
There have been some interesting recent developments in Altice’s native France, where it owns SFR. Incumbent Orange decided to sell 50% in the Orange Concessions division earlier this year to a consortium of local French equity firms, raising funds to pursue an aggressive fiber roll-out in rural France, either directly though infrastructure build-outs, or investing in or acquiring smaller regional fiber operators. The $1.6bn raised will go a long way to helping Orange realize its Engage 2025 vision, a set of plans published in August 2020 providing a rough guideline for how Orange will reinvent its operator model over the next five years.
Through its Openreach division, which handles the building and running of the fixed network, BT could pursue a similar strategy to Orange on the acquisition front, although there are fewer smaller broadband providers rural areas of the UK, compared to France, for BT to swallow, and this would be met with regulatory scrutiny.
On the other side of the pond, Altice USA has announced the sale of a stake of a little under 50% in its fiber business Lightpath to Morgan Stanley Infrastructure Partners for $2.3bn. Despite this sale, Altice USA has been eager to remind us of its expanding gigabit availability and its commitment to building out FTTH infrastructure, claiming that over three-quarters of its entire footprint now has access to 1Gbps broadband speeds. Altice USA was officially separated from Altice NV back in 2018.