- Altice USA has long been considered a potential acquisition target for Charter or Comcast
- M&A hype aside, analysts are skeptical an Altice buy will happen anytime soon
- But new financing could help Altice turn a corner on its long-term prospects
With M&A generating a domino effect on the telecom industry, we can’t help but wonder which major operator is next on the consolidation block. Altice USA has been a long-rumored cable acquisition target – could now be the time for a rival to make a move?
There’s been plenty of cause for speculation, as reports from early 2024 suggested Charter was mulling an Altice takeover. Fellow cable giant Comcast is another company analysts have pegged as a possible buyer.
Considering Charter just scooped up Cox Communications for $34.5 billion, the chance of “Chaltice” happening seems a lot less likely. But Altice could still end up in either Charter or Comcast’s hands in the future, noted Recon Analytics Principal Roger Entner.
“It makes sense for either one of them if Altice decides to sell," Entner said.
Altice’s Optimum brand currently serves more than 4 million subscribers across nearly 10 million locations, mostly concentrated in the New York tri-state area where it offers fiber. The company also continues to roll out cable upgrades in its western footprint for states like Louisiana, North Carolina and Texas.
In Entner’s view, Altice does have what it takes to stay independent, “but it’s a difficult path.” Ever since CEO Dennis Mathew took over in 2022, the operator’s undertaken a quest to cut costs and stabilize operations, all while continuing to grow its fiber base.
The tide appears to be turning. Altice just announced it landed a $1 billion loan agreement that securitizes network assets in the company’s Bronx and Brooklyn service areas. All told, the asset-backed securitization (ABS) covers 1.5 million locations and around 695,000 customers in these markets.
According to New Street Research, we could see more to come from Altice on the ABS front.
“Altice has already started laying the groundwork for raising more debt by securitizing their Lightpath assets,” wrote NSR analyst Vikash Harlalka in a note to investors. “We think Altice is building significant ABS capacity as the size of its fiber customer base grows.”
Other operators that have snagged ABS funding include Frontier, Metronet and Ziply Fiber. Coincidentally, all three are in the process of being acquired, so perhaps the fresh funds spell out a similar path for Altice.
But any company interested in Altice could face a regulatory road bump, according to MoffettNathanson’s Craig Moffett.
“Altice has some attractive markets, but any deal for all of Altice would have to go through the NY Public Service Commission for Optimum East,” he told Fierce. “That’s a meaningful negative for any strategic buyer considering a bid.”