Altice USA on Friday officially completed its separation from its European parent, a step aimed to streamline operations and quell any investor concerns over Altice NV’s debt burden affecting the U.S. business.
The spinoff, first announced in January, happened via an in-kind special distribution of Altice NV’s 67.2 percent interest in Altice USA to Altice NV shareholders out of its share premium reserve.
As part of the move, Altice NV has changed its name to Altice Europe NV.
Patrick Drahi, Altice USA CFO Charles Stewart, and Altice Europe Treasurer Gerrit Jan Bakker were appointed to Altice USA board of directors, with Drahi serving as chairman.
Earlier in the week, with the formal separation on the horizon, MoffettNathanson analyst Craig Moffett in a note to investors posited about future M&A opportunities, saying the firm continues to see midsized operator Mediacom as a good fit for Altice.
“To be sure, the company needs to reduce leverage before they can pursue acquisition, but eventually, they will be looking to buy,” Moffett wrote. “With cable valuations now more reasonable, Altice USA working its margin magic on a new target would be a nice catalyst.”
Earlier this year Mediacom founder and CEO Rocco Commisso told Forbes he had taken multiple meetings with investment bankers in the last year, indicating the privately-held operator—worth an estimated $4.3 billion – could be for sale.
Still, Moffett made clear Altice faces challenges and that he and colleagues are not “starry-eyed bulls” when it comes to their analysis of the company.
“The company’s Cablevision assets are still challenged; they face high fiber overlap in their footprint and enjoy an already-high broadband penetration rate of 52% today (leaving them with more to lose and less to gain than peers),” Moffett wrote. “If and when Verizon FiOS pivots to a $79 per month Gbps broadband-only offer as their lead offer (today they over emphasize a sub-par video offering), it would be hard for Altice USA to respond.”
“At best, it would cap pricing. At worst it would threaten market share,” he noted. “And there is also the nagging fear that they are simply cutting too much cost, as appears to have been the problem with SFR for Altice NV.”
