Altice shares rise on US spin-off plans

on Jan 9, 2018

Altice shares were trading higher Tuesday, on news the telecoms and cable firm will reduce its debt by separating its US and European businesses. The plan has already been approved by the Altice board.

By 1015 BST, Altice shares were trading 5.92% higher at €10.00. That’s the highest price for the Altice stock since mid-November 2017.

Change should reassure investors

The decision to separate the European and US Altice operations comes as the company’s debt-fuelled growth plan has become a concern among investors. The business has prospered in the US, providing support for this spin-off plan.

While the separation of Altice USA from Altice’s European operations (to be renamed Altice Europe) will protect the state side arm’s performance and profits, the US arm of Altice will make a $1.5 billion dividend payment to the European operation. That’s a move that will help improve the European balance sheet and further placate investors.

“The separation will allow both Altice Europe and Altice USA to focus on their respective operations and execute against their strategies, deliver value for shareholders, and realize their full potential,” said Altice founder Patrick Drahi.

“The proposed transaction is designed to create simplified, independent and more focused European and US operations to the benefit of their respective customers, employees, investors and other stakeholders,” the Altice press release states.

Founder retains control

While the separation of the Altice operations will provide some clarity to each group, founder Drahi will retain control over both entities. There will be a separate management team for both separate business – Drahi will head both of teams.

“Both operations will have the fundamental Altice Model at their heart through my close personal involvement as well as that of the historic founding team,” Drahi said.

Plans are already taking shape as to what happens next for each arm of Altice.

For Altice Europe, the plan outlined in the press release is for work to begin on improving the business in Portugal and France.

For Altice USA, the new management team will continue forward with the existing plans to deliver even better services to US customers.