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Capital Markets

Corporate finance: Altice through the looking glass

Patrick Drahi has taken advantage of low-cost debt to make Altice one of the world’s most acquisitive media conglomerates. Bankers who have benefited from its spending spree say Altice has shown what is possible in the post-crisis markets. But investors are increasingly worried about the company’s leverage levels and complicated debt structure. Can Drahi see his vision through?

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Illustration: Paul Daviz

It was a pretty straightforward question with a pretty revealing answer. When Patrick Drahi, Franco-Israeli billionaire and founder of French telecommunications group Altice, was recently asked which other US cable operator he might be interested in buying following the announcement of his firm’s $17.7 billion purchase of Cablevision in September, he reportedly stated: “All of them, basically.”

Given Altice’s recent track record, that response is not as outrageous as it sounds. Since buying most of Société Francaise du Radiotéléphone from Vivendi last April, Altice has snapped up Portugal Telecom, more of SFR, US cable firms Suddenlink and Cablevision and has tried, but failed, to buy Bouygues Telecom and Time Warner Cable. 

And as long as the markets will fund him, Drahi shows no sign of slowing down or of becoming a poorer source of fee income for the banks that arrange his funding. In the nine months to September 2015 Altice incurred deal fees of €69 million ($75.5 million). 

“When you are focused on debt reduction, it is because you have a growth problem,” Drahi declared in May 2015 when speaking to a French parliamentary committee.

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