Altice, the Patrick Drahi owned European cable, and mobile group is buying 70% of Suddenlink Communications. This is the start of an ambitious plan of the firm to enter the US cable market.
Suddenlink is America’s seventh-biggest cable operator and is valued at $9.1 billion. This is Altice’s first entry into the world’s biggest cable market after a series of European deals. By this deal, Altice has acquired a firm with 1.5 million subscribers in 17 states of the US. The deal may have set up Altice nicely for a bigger target: Time Warner Cable Inc (NYSE:TWC).
Recently the American cable company Comcast had to withdraw its $45 billion offer for Time Warner Cable because of regulatory issues. An inside source has revealed Altice has reached out to other American cable firms including Time Warner Cable.
Apparently the talks were pretty preliminary and may not lead to a deal. The US market is a very attractive target to entrepreneurs. Mr. Drahi has assembled a massive cable and telecommunications business in Europe. However, the business has been held back by national boundaries and disparate regulatory structure.
The entry of foreign firms into the American cable market could potentially throw up significant regulatory concerns. This is particularly in the case of acquisition of Time Warner Cable with a subscriber base of 15 million customers.
Although little known in the US, Altice has a significant presence in Europe. Altice is a major telecom operator in France with 6.5 million fixed-line customers and 22.5 million mobile customers.
As a rule, Altice has been decisive and quick to slash costs to boost profitability in the firms it acquires. This cost cutting model may be a worry for US government regulators. The latter will have to evaluate whether a deal between Altice and an American cable operator was healthy to the industry as a whole.