Research Update: Telecommunications Operator Altice France Outlook Still Negative On Governance Concerns; 'B' Rating Affirmed

Next Alt together with Next Private have taken Altice Europe private for a total consideration of €3.1 billion (fully financed with debt) and have liquidated the entity, effectively leaving Next as the sole owner of Altice France and Altice International, with no consolidated reporting requirement. After the take-private transaction closed, Altice agreed to sell its remaining 50.01% stake in the French towers (Hivory) to Cellnex for €2.65 billion and used the related proceeds to repay the take-private debt. In our view, this addresses the debt overhang concern we raised when the take-private was announced last September, but demonstrates an ability and willingness to prioritize shareholder interests. We expect improving operating results, but await confirmation of their sustainability given multiple years

...- Next Alt together with Next Private have taken Altice Europe private for a total consideration of 3.1 billion (fully financed with debt) and have liquidated the entity, effectively leaving Next as the sole owner of Altice France and Altice International, with no consolidated reporting requirement. - After the take-private transaction closed, Altice agreed to sell its remaining 50.01% stake in the French towers (Hivory) to Cellnex for 2.65 billion and used the related proceeds to repay the take-private debt. In our view, this addresses the debt overhang concern we raised when the take-private was announced last September, but demonstrates an ability and willingness to prioritize shareholder interests. - We expect improving operating results, but await confirmation of their sustainability given multiple years of materially negative free cash flow after leases; lack of transparency on the cash flow contribution coming from telecom services versus off-balance-sheet; debt-funded fiber to the...

Research Update