Altice seeks up to $10.78B for Portuguese assets

Saudi Telecom Company (stc) and Xavier Niel’s Iliad Group are reportedly among the potential suitors for Altice’s Portuguese unit, although the ever-increasing price tag for the assets could prove an obstacle.

According to Bloomberg, which cited unidentified sources, Warburg Pincus has also been invited to the second round of bidding and has teamed up with buyout firm Zeno Partners and former Credit Suisse Group AG Chairman António Horta-Osório. Other private equity firms such as Apollo Global Management and CVC Capital Partners have apparently dropped out.

It has been reported for some time that Altice Portugal is up for sale, with an estimated price tag of €6 billion ($6.46 billion) to €7 billion. However, Bloomberg is now reporting that Altice Group founder and owner Patrick Drahi is hoping to fetch as much as €8 billion ($8.62 billion) to €10 billion ($10.78 billion) for the unit. As the news agency wryly noted, potential bidders are struggling to meet that expectation.

Drahi wants to sell Altice Portugal, which includes the MEO-branded fixed and mobile operator, to help reduce the group’s close to $60 billion debt burden. The debt is spread across three entities, all controlled by Drahi: Altice International, with net debt of €8.6 billion ($9.2 billion) at the end of September; Altice France, with net debt of €24 billion ($26 billion); and listed unit Altice USA, with net debt of $23 billion.

French fiber firm also for sale

Meanwhile, Bloomberg also reported that KKR and Macquarie Group are among the suitors that have been shortlisted in the bidding for XpFibre, part of Altice France. Other bidders are said to include pension fund Caisse de Depot et Placement du Quebec and Global Infrastructure Partners.

Altice owns 50.01% of XpFibre, which is responsible for the construction, maintenance and commercialization of a fiber network in France. The rest of the company is owned by a consortium majority-led by OMERS Infrastructure that also includes Allianz Capital Partners and AXA IM Real Assets.

As noted by Bloomberg, the three investors acquired the minority stake for €1.7 billion in 2019, valuing the unit at €3.4 billion.

Challenging times 

To be sure, the Altice Group has been experiencing months of turmoil owing not only to the high levels of debt, but also to a corruption scandal in Portugal.

As previously reported by Reuters, Altice subsequently suspended about 15 employees as a result of the investigation, which focuses on alleged efforts to rig the group’s local procurement process and is expected to take years to resolve.

In a November 2023 statement, Altice International, the home of Altice Portugal (or MEO), and Altice France said they were on track to transition away from all suppliers potentially implicated in the Portuguese authorities’ investigation by the end of 2023.

Alexandre Fonseca, the co-CEO of Altice Group who led Altice Portugal from November 2017 to April 2022, left the group early this year. Last year, Fonseca suspended himself from all duties at the group following the probe into alleged corruption, although he was not considered a suspect in the investigation.

In August, Drahi told investors he felt “shocked” and “betrayed” by the probe in Portugal.

Expansion ambitions

As for the potential telecom buyers of Alice assets, it has been reported for some time that both Iliad and stc are interested in the Portuguese operations.

France-based Iliad is certainly keen to expand further in Europe, although it has failed to persuade Vodafone to agree to a merger of their respective fixed and mobile operations in Italy.

stc has also made no secret of the fact that it is pursuing a strategy to expand its international presence. For example, the Saudi operator currently owns a 4.9% stake in Telefónica Group, and is set to increase this to 9.9% should it receive regulatory approval. 

In August 2023, stc acquired United Group’s tower assets in Bulgaria, Croatia and Slovenia and has now brought them under wireless infrastructure subsidiary TAWAL.