Altice, a bulimic group that still has appetite – Les Echos

The businessman swallow prey on prey. But according to his calculations, he has the ability to do more.

How far will he go? Those who knew him closely say it all: Patrick Drahi, President of Altice (parent Numericable, SFR), has no limit, it’s a global empire that is being built , and we have seen nothing yet! The boldness of the character as much as it surprises bluffing: only last year he swallowed one after SFR, Virgin Mobile and Portugal Telecom. If we add Suddenlink Communications, adding salt starts to be more than 30 billion euros spent in just a few months.

Delusions of Grandeur? Not really. The Drahi method is rational: he carry debt on repurchased assets and table issued on the cash flow to repay. Risqué? Yes, because one must be certain to generate Ebitda necessary to repay banks each year. Clearly, in an economic downturn, Patrick Drahi should have to worry about. But the businessman, known for its financial arrangements, leaves nothing to chance. In the case of redemption of SFR, for example, the largest operation in the history of Altice, he contracted a long-term debt, the first anniversary of reimbursement being fixed to May 2019. By then, he pays that interest. He also took care to negotiate almost entire debt at fixed rates. It cost him a little more, but that’s the price to pay to bring some peace.

Whose turn

Overall, the logic is simple: the more it made acquisitions, the more s enriches and therefore, the more it increases its ability to repay its debts. At that rate, you can buy without limit! The only catch is the net debt / EBITDA. The Numericable Net debt is “capped” (capped) to four times its Ebitda, and five times for Altice. The mother can thus more than the girl. With Suddenlink, debt Altice rose 0.2 points, reaching 4.9 times Ebitda; it is therefore no question of charging the beast. There is however room for maneuver for the girl, Numericable, whose debt reached 2.9 times Ebitda. This is what makes Dexter Goei say, the right arm of Patrick Drahi in Altice, that Suddenlink operation “ does not impact in any way the group’s ability to make further acquisitions in Europe “.

Therefore, who’s next? All eyes are Bouygues Telecom, that is not for sale but for which Patrick Drahi has never hidden his interest. As incredible as it sounds and if we stick to the speeches of the leaders of Altice, the group could very well manage together four operations: SFR integration into Numericable, the redemption of Portugal Telecom ( not yet finalized), that of Suddenlink plus another operation.

Capital increase

“ After Suddenlink, consolidating a portion of the cable in the United States would make sense, as and extent of the decline in the debt of Altice “Judge Vincent Maulay, an analyst at Oddo Securities. Reducing debt for teams of Patrick Drahi, it’s not a problem: they are the experts in cost reduction. One has only to see the work done on Numericable end of November: in three months, the Group generated 200 million synergies or, if it keeps this pace, an annual rate of nearly 800 million against a target 1.1 billion in 2017!

Ebitda raising, debt may drop. And all dreams are possible: including the goal to buy a bigger prey either, as the giant Time Warner Cable who Altice have started trading. $ 44.5 billion of market capitalization, against 30 billion to Altice. But nothing seems to scare Patrick Drahi. If necessary, Altice could also conduct a capital increase, even if it means that the latter is a little diluted in the capital, which it now owns 60%. It is not a taboo.