(Bloomberg) -- Altice International is considering selling the infrastructure assets of its Portuguese business separately after a plan to dispose of the entire unit stalled.
The telecommunications empire of Franco-Israeli billionaire Patrick Drahi has been seeking to dispose of assets to deleverage the business after years of debt-fueled acquisitions. Altice’s Portuguese assets include the carrier MEO as well as a stake in fiber-optic network Fastfiber, which it jointly owns with Morgan Stanley’s infrastructure arm.
“With all the discussions we had over the last months on the entire Portuguese perimeter, we may have seen some appetite for some of them,” Chief Financial Officer Malo Corbin said in a call with investors on Thursday. “But there is no concrete transaction or perimeter that we could discuss on this call.”
Altice International has assets in Portugal, Dominican Republic and Israel. The Portuguese unit is at the center of a corruption investigation involving Armando Pereira, co-founder of Altice and Drahi’s right-hand before his 2023 arrest.
Earlier this month, the company agreed to dispose of its video advertising platform Teads SA in a $1 billion deal with US ad company Outbrain Inc. Altice plans to use €315 million ($349 million) from the sale to repay drawn amounts of a revolving credit facility after the deal’s expected completion in the first quarter of next year, it said in a second-quarter earnings report.
Management told investors it will consider what to do with the remaining proceeds once the transaction closes, but said they will remain within Altice International’s perimeter and be “focused on having the right leverage,” Corbin said.
During Thursday’s call, investors tried to get clarity on whether the company will follow Altice France’s lead in asking creditors to take haircuts.
“We’re trying to resolve the situation of SFR for the longer term,” Corbin said, referring to Altice France. “That process could help Altice International in a significant fashion.”
The company’s euro bond due in January 2028 rose by its biggest intraday margin in three months.
Revenue Drop
Altice International also reported a 2.2% revenue decline for the quarter through June compared to the previous year, while earnings before interest, taxes, depreciation and amortization dropped by 1.1%. The declines were led by the business service unit Altice Labs in Portugal and the impact from the war in the Middle East, the company said.
Total accrued capital expenditures was €186 million, and the operating free cash flow amounted to €225 million.
In the company’s effort to cut debt, Drahi told investors in September last year that he was willing to potentially put everything in the Altice universe on the table, but has since been more selective in the assets he makes available for sale.
Altice International shelved plans to sell assets in the Dominican Republic in May as the offers received were considered too low, Bloomberg previously reported. Management also stated that is Israeli business, Hot, is not for sale.
Altice International has a smaller debt pile than the two other silos, Altice France and Altice USA.
Debt Pile
Consolidated net debt, accounting for the sale of Teads and the redemption of the company’s €600 million 2.25% notes due next year, was €8.5 billion at the end of the second quarter, the company said in a statement.
Leverage was 5.1 times earnings before interest, taxes, depreciation and amortization, Altice said, reiterating its target to cut that indicator to four to 4.5 times without specifying a timeframe.
The company extended the maturity of a loan to Altice UK until October 2026 in March. Management said on Thursday it transferred that loan to Altice Group Luxembourg and is not expecting a repayment anytime soon.
La Poste Telecom
Altice France, in a separate announcement on Thursday, reported a 5.2% revenue drop for the second quarter. Ebitda decreased 7.5% compared to the previous year due to a slowdown in construction, higher expenses and the inability to pass inflationary costs onto consumers, the company said.
Net debt for the French silo was €24.4 billion, slightly higher than in the previous quarter.
The silo has also been disposing of assets in the past year to cut leverage, including Altice Media and a majority stake in SFR’s data centers.
Competitor Bouygues Telecom received regulatory approval to buy La Poste Telecom, a small carrier in which SFR holds a 49% stake. However, no agreement has yet been reached for that asset, management said during the earnings call.
They didn’t take questions from investors.
--With assistance from Henrique Almeida.
(Updates with Altice France earnings)
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