Altice USA Plans Separation From European Parent

Patrick Drahi will retain control of both Altice USA and Altice N.V

Altice has simplified its operating structure into two distinct European and USA businesses, with founder Patrick Drahi promising a "close personal involvement" as the company looks to get back on track.

Altice founder Patrick Drahi (second from left) is joined by Altice USA CEO Dexter Goei (center) at a fiber deployment site on Long Island, N.Y.

In addition, the Altice USA board of directors approved a $1.5 billion cash dividend to all shareholders immediately prior to completion of the separation. The listed USA business, no longer owned by Altice NV, will then be shielded from concerns about the European operations. Both companies will have new management.

Altice shares were trading higher Tuesday, on news the telecoms and cable firm will reduce its debt by separating its USA and European businesses.

Altice said it was still looking to sell off its tower portfolio and its operations in the Dominican Republic.

Altice's performance in Europe past year led investors to question its strategy, and in November founder Patrick Drahi returned as president while Chief Executive Michel Combes resigned.

Altice has grown in the United States and Europe through debt-fuelled acquisitions, raising its net debt to more than five times its annual core operating profit.


In 2015, it bought two big USA cable operators in separate deals: Cablevision Systems Corp for $17.7 billion and Suddenlink Communications for $9.1 billion.

The company largely fulfilled its promise to cut costs aggressively at the businesses it bought but often failed to achieve the operational turnarounds and growth it targeted.

Telecoms and cable group Altice NV is separating its U.S. and European operations to try to reassure investors alarmed by its high debt and low revenue generation, especially in its core French telecoms business.

The US business, no longer owned by Altice NV, would be shielded from concerns about the European operation, while a parting US$1.5 billion dividend payment will improve the balance sheet of the European arm.

"With U.S. activities clearly split, the contagion effect will not be felt", said Thomas Coudry, an analyst at Bryan, Garnier & Co.

Following the spinoff of Altice USA Inc from Altic NV, Altice NV will reorganize to Alitce Europe. "That should solve their "guilt by association" problem", Moffett said.

Altice is also hoping to raise as much as 3 billion euros from the sale of its Dominican Republic business, sources told Reuters in November.

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