Altice spins off US business and alters European structure | Major Businesses | Business
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More turmoil at cable company Altice USA as its parent company decides to spin off the business altogether in a major corporate restructuring.

altice experience center 25 nov 2017Days after premium network Starz pulled its content from its US cable arm in which it owns a 67.2% stake, Altice NV has not only announced that it is separating its US business through a distribution in kind to its shareholders, but will also rename itself as Altice Europe, comprising Altice France, Altice International and newly formed Altice Pay TV subsidiary.

The latter will include integrating Altice’s support services businesses into their respective markets and bundling Altice Europe’s premium content activities into one separately funded operating unit with its own P&L. The newly formed Altice Pay TV will include the Altice Content division, major sports rights (including Champions League and English Premier League), and other premium content rights (including Discovery, NBC Universal). Altice France will cancel its existing wholesale pay-TV contracts for the content and channels being transferred to Altice Pay TV and will become a wholesale customer of Altice Pay TV with a new revenue sharing contract and significantly reduced annual minimum guarantee, in exchange for break fee of around €300 million payable in 2018 to Altice Pay TV.

The new arrangement will include the transfer of other premium content contracts from Altice France to Altice Pay TV and allow Altice France to continue to distribute premium pay-TV content to its customers, including SFR Sports and Altice Studio channels.

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. Going forward, the two companies will be led by separate management teams. Patrick Drahi, founder of Altice, will retain control of both companies through and has expressed its commitment to long-term ownership, serving as president of the board of Altice Europe and chairman of the board of Altice USA.

The European telecoms group entered the US market in a fanfare after acquiring in May 2015 a 70% interest in US cable firm Suddenlink Communications in a deal valued at $9.1 billion. However, it now says that a separation will enable each of its business to focus more on the distinct opportunities for value creation in their respective markets and ensure greater transparency for investors. Altice NV aims to complete the proposed transaction by the end of the second quarter 2018 following regulatory and Altice NV shareholder approvals.

Commenting on the move, Drahi said: “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 realise their full potential. 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. Altice Europe has tremendous opportunities as we deliver on our operational aspirations around much improved customer service and monetising our premium infrastructure and content assets. Altice Europe has a unique asset base that is fully converged and fibre rich with strong number one or number two position in each market with nationwide fixed and mobile coverage ... Altice USA sees exciting opportunities in the US market as we start 2018 with strong momentum. We have a full operational agenda to deliver best-in-class services to our customers, drive innovation and advance our fibre investment strategy.”