Altice USA targets private equity infrastructure funds in early Suddenlink sale negotiations, sources say:

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Dexter Goei, CEO of cable and mobile telecom company Altice.

Benoit Tessier | Reuters

Altice USA, the fourth largest cable company in the US, is targeting private equity infrastructure funds as potential buyers early in the Suddenlink sale process, according to those familiar with the matter.

Dexter Goei, Chief Executive Officer of Altice USA, confirmed on Wednesday that the company has begun a sale process for Suddenlink, a cable provider that offers services to 17 states, including Texas, Louisiana and West Virginia. Altice USA acquired Suddenlink for $9.1 billion in 2015. Bloomberg first reported talks of a sale.

Altice USA’s financial advisers have reached out to more than a dozen private equity funds in hopes of finding a buyer, the people said, asking not to be named because the talks are private. There have been no discussions with Charter, the second-largest US cable company and a potential candidate, given the lack of a geographic footprint in many of the places Suddenlink serves, the people said.

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An Altice USA spokesperson declined to comment on potential buyers.

Valuations of listed cable assets Comcast and Charter have fallen about 25% or more this year as broadband internet growth has slowed. Altice USA is interested in selling Suddenlink so it can focus on managing the assets previously known as Cablevision, which is further along in its transition to fiber, a higher-speed network that can better compete with growing competition from wireless. businesses. Goei said on Wednesday that those assets will be “quite completely fiberized” by the end of 2024.

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Altice USA has no set target price in mind for Suddenlink, the folks said. Talks to sell Suddenlink are still early and no deal is secured, the people said.

Some infrastructure funds specialize in making the switch from cable to fiber. Therefore, Suddenlink can be an attractive acquisition for a fund that wants to invest in an asset that it can sell later.

Blackstone Infrastructure Partners, EQT and Stonepeak are among the funds that have purchased cable or fiber networks in recent years. Stonepeak paid more than $8 billion in 2020 to Astound Communications, the sixth largest U.S. cable provider.

WideOpenWest Sale

Private equity infrastructure funds are also interested in acquiring WideOpenWest, which offers cable services to regions of the country that already have another cable operator licensed to provide Internet, telephone and TV services. Bloomberg reported in May that Morgan Stanley’s investment arm was interested in buying the so-called cable overbuilder, which has a market value of $1.7 billion.

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If a deal for WideOpenWest, or WOW, comes first, Altice USA can argue that Suddenlink should trade at a higher multiple. Suddenlink is the only cable provider in about 70% of the markets it serves, making it more valuable to a potential buyer who wants more pricing power and fewer competitors.

Disclosure: Comcast is the parent company of NBCUniversal, which owns TBEN.

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