Altice touts deleveraging progress, sees 4.0 times debt ratio by end of ’18

By Paul Deckelman

New York, Sept. 12 – Altice NV – The Netherlands-based cable and telecommunications giant, with operations ranging from Europe to the United States, the Caribbean and Israel – has been on a largely debt-funded shopping spree over the past few years which has seen it acquire, among other properties, French cable operator SFR in 2014, PT Portugal and U.S.-based cablers Suddenlink Communications in 2015 and Cablevision last year, and earlier this year, Israel’s Hot Telecommunications Systems Ltd.

But company executives said Tuesday that the global communications empire generates a lot of cash – and has been bringing its leverage ratio of net debt as a multiple of adjusted EBITDA down steadily.

Its chief executive officer, Michel Combes, told participants at the 26th annual Goldman Sachs Communicopia industry conference being held in New York that “we are starting to see some good signs of deleveraging in the different regions in which we do operate. In the U.S., we came from 7-to-7.5 [times] leverage to 5-to-5.5 [times], and we are deleveraging in Europe as well.”

Combes said that the continued deleveraging “will give us some room [to] maneuver in the mid-to-long term,” in addressing possible merger and acquisition transactions or opportunities for other types of strategic transactions.

“We will [see] the opportunities there, and depending what is there, we’ll see if it is accretive to our shareholders.”

Dexter G. Goei, who serves as president of Altice NV’s board as well as CEO of its American subsidiary, Bethpage, N.Y.-based Altice USA, said that the latter unit will “probably be at 4 times leverage by the end of 2018.”

No rush on M&A

While M&A is certainly a possibility somewhere down the road, given the company’s history of growth, Combes told the conference participants that “execution remains our priority, meaning we are quite proud of what we have been achieving in the U.S. and Europe in the past 12 months, we have delivered on our targets. We have been able to deliver the “best in class” type results.”

He repeated the truism that “if we want to continue to use our cash in the mid- to long-term, we first have to generate cash. So that remains the absolute priority.”

When asked about whether it might look to expand its European holdings, he replied that “in Europe for the time being, I don’t see a major target there. ... I don’t see a major move in Europe for the short-term.”

Goei, meantime said that on the domestic cable and telecom scene, “we want to be open minded about M&A, with the right capital structure, right value, patient about relative valuations ... We said very publicly during our [Altice USA] IPO that we anticipate having the opportunity to double our footprint over the next five years. We think that possibility, given all the talk around consolidation in our sector, is even more credible and very possible, so we’ll be patient. We’ll look at the opportunities as we see fit.”

However, he also sounded a cautious note, declaring that “we’re absolutely not going to stretch ourselves to do anything that we don’t think is good for our shareholders today, on a value standpoint.”

Big stock buyback program

One thing Altice is planning to do with its built-up cash is buy back shares; it announced on Aug. 28 that it would repurchase up to €1 billion of its shares over the next 12 months.

Asked to describe the rationale for that announcement, Combes replied that “the answer is quite straightforward – we believe, the management of the group, believes that investing in our own shares today, at the share price and with the potential that we see in Altice NV, not only in the U.S. but also in Europe, is probably the best way to create value for our shareholders. So let’s say it was a no-brainer in terms of a decision.”

Goei added that “if you look at our relative valuation, relative to our peers, we still believe we’re undervalued, so that will be a question of time, for the market to reflect some parity here in valuations.”

In the meantime, he said that Altice remains “very focused on operations; I think time continues to prove out our business model and our growth opportunities.”

He concluded “so we feel very comfortable that we have great opportunities to create value for our shareholders today.”

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.