Technology · August 5, 2022

Altice USA targeted private equity infrastructure funds in early Suddenlink sales negotiations, sources say

Dexter Goei, CEO of cable and wireless company Altice.

Benoît Tessier | Reuters

Altice USA, the fourth largest US cable company, is focusing on private equity infrastructure funds as potential buyers early in the Suddenlink sale process, according to people familiar with the matter.

Altice USA chief executive officer Dexter Goei confirmed Wednesday that the company has begun a sale process for Suddenlink, a cable provider serving 17 states including Texas, Louisiana and West Virginia. Altice USA acquired Suddenlink in 2015 for $9.1 billion. Bloomberg first reported on sales talks.

Altice USA’s financial advisers have approached more than a dozen private equity funds in hopes of finding a buyer, the people said, asking not to be named because the talks are private. It hasn’t yet spoken to Charter, the second-largest US cable company and a potential suitor, because it doesn’t have a geographic footprint in many of the places where Suddenlink operates, the people said.

A spokesman for Altice USA declined to comment on potential buyers.

The valuation of publicly traded cable assets Comcast and Charter is down about 25% or more this year as broadband internet growth has slowed. Altice USA is interested in selling Suddenlink so it can focus on operating assets formerly known as Cablevision, which are further along in the transition to fiber, a high-speed network that can better compete with growing competition from wireless carriers. Goei said on Wednesday that those assets will be “pretty completely unraveled” by the end of 2024.

Altice USA has no firm price target in mind for Suddenlink, it said. Talks to sell Suddenlink are still early and no deal is certain, people said.

Some infrastructure funds specialize in the switch from cable to fiber, so Suddenlink could be an attractive acquisition for a fund looking to invest in an asset it can later sell.

Blackstone Infrastructure Partners, EQT and Stonepeak are among funds that have acquired cable or fiber networks in recent years. Stonepeak paid more than $8 billion to Astound Communications, the sixth largest US cable provider, in 2020.

WideOpenWest rises

Private equity infrastructure funds are also interested in acquiring WideOpenWest, which provides cable service to regions of the country that already have another cable operator licensed to provide Internet, phone and television services. Bloomberg reported in May that Morgan Stanley’s infrastructure investment arm was interested in buying the so-called cable overbuilder, which has a market valuation of $1.7 billion.

If a deal for WideOpenWest or WOW goes through first, Altice USA can argue that Suddenlink should trade at a higher multiple. Suddenlink is the sole cable provider in about 70% of the markets it serves, making it more valuable to a potential buyer who wants more pricing power and fewer competitors.

Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC.

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