European parent, along with private-equity firm and CPPIB, looking to sell over 46 million shares to raise $1.35 billion
The logo of cable and mobile telecoms company Altice Group in Paris.
The logo of cable and mobile telecoms company Altice Group in Paris. Photo: philippe wojazer/Reuters
By Nick Kostov and
Corrie Driebusch
June 21, 2017 10:01 a.m. ET
1 COMMENTS
Altice USA is hoping to woo investors back into telecom in its initial public offering.
The U.S. subsidiary of European telecommunications company Altice NV, formed through the merger of New York-based Cablevision Systems Corp. and Suddenlink Communications, is expected to start trading on the New York Stock Exchange on Thursday, according to people familiar with the offering.
It’s poised to be one of the biggest U.S.-listed IPOs of the year.
Altice, private-equity firm BC Partners and stakeholder Canada Pension Plan Investment Board are aiming to sell roughly 46.6 million shares in the offering, raising $1.35 billion if it prices at the midpoint of its target range of $27 to $31 a share, according to a regulatory filing.
That would make it the biggest U.S.-listed telecom IPO since the early 2000s, according to Dealogic, when the tech boom ushered in a wave of cable and wireless operators. At $29 a share, Altice USA would be valued at more than $21 billion.
Altice executives traversed the country during its pitch to investors, with executives making stops in New York, Boston and California, according to a person familiar with the roadshow.
Investors who buy shares will be making a bet that the U.S.’s fourth-largest cable operator by revenue will be able to leverage the money raised in an offering and grow in an environment where competition is stiff.
U.S. telecom stocks have suffered this year. In the S&P 500 telecom sector, Altice competitors AT&T Inc. and Verizon Communications Inc. are down 9.1% and 14%, respectively, in 2017 through Tuesday. European-listed shares of Altice NV are up roughly 20% over the same period.
Investors will also be betting on Patrick Drahi, the French billionaire who founded Altice. He will retain almost entire control over the company after the IPO, according to a regulatory filing. Altice is offering Class A shares, which have almost no voting rights.
Altice’s growth strategy in the U.S. has followed a playbook it rolled out in Europe and Israel, where Mr. Drahi tapped into investor demand for higher-yield corporate bonds to finance a shopping spree. Mr. Drahi, who has cited U.S. cable magnate John Malone as an influence, then slashed costs to improve profit.
Altice executives say their strategy helped boost the performance of its U.S. arm last year. Altice USA posted a net loss of $721.3 million last year compared with $1.1 billion loss a year earlier. Its adjusted earnings rose to $3.35 billion from $2.77 billion in the same period, according to a regulatory filing.
But Altice’s approach has drawbacks. According to the filing, Altice USA’s net debt stands at more than $20 billion. At the group level, Altice NV’s debt pile stood at more than €50 billion ($55.74 billion) on March 31, and the company paid a bill of around €3 billion on interest payments last year, according to filings.
Altice executives were pressed about some of these things during the company’s pitch to investors, according to the person familiar with the roadshow. Investors questioned executives about the company’s plan to convert its systems into an ultrafast fiber-to-the-home network and the cost savings that it still expects to wring from merging Cablevision with Suddenlink, according to the person.
Altice USA shares are set to begin trading Thursday under the symbol “ATUS.” The deal is being led by J.P. Morgan Chase & Co., Morgan Stanley , Citigroup Inc. and Goldman Sachs Group Inc.
Write to Nick Kostov at Nick.Kostov@wsj.com and Corrie Driebusch at corrie.driebusch@wsj.com