After successful takeover of the smaller player Suddenlink, France based Altice SA is now planning to take over Time Warner Cable Inc., which is the third offer the latter has received in the past few months.
The French multinational cable and telecommunications company Altice SA (ATC, Financial) is all set to make a bid offer for New York based Time Warner Cable Inc. (TWC, Financial) after being almost in its final stages of the deal with St. Louis based Suddenlink Communications. It is certain that after establishing a strong hold in French market, Altice is all set to enter U.S. with two of the known and big telecommunications companies.
Deal with Suddenlink-
Founded in 2006, Suddenlink communications is the ninth largest provider of cable broadband services in the U.S. and has coverage available to about 5.7 million subscribers. As of now, the company operates in 16 states in the U.S. The deal is almost on the verge of completion between Altice and Suddenlink, which has been valued at $8 billion- $10 billion, which is inclusive of debt and is expected to be declared to public by this week itself.
The Luxembourg based cable and telecom company Altice has a market value of $32 billion and with the entry in U.S. through Suddenlink, the company is ready to expand its reach to almost 1.5 million customers in more than 12 states including Texas and West Virginia. The U.S. based cable operator is the seventh largest by video customers and reported revenue of $2.3 billion last year. Currently, it is a majority-owned by private-equity firm BC Partners and a Canadian pension fund, which paid $6.6 billion to buy it in 2012.
Deal or no deal with Time Warner-
Even if Altice enters the U.S. market through Suddenlink takeover, the company will still be hungry for a success and Time Warner takeover is being considered to be rather beneficial to the former. The cable operator of U.S. holding second place in the market by subscriber numbers, has been contacted by Altice for merger talks. Earlier this year, Comcast (CMSA, Financial) had made an unsuccessful trial for acquisition of Time Warner. However, if Altice succeeds in its plans, it will help Altice enter U.S. with quite a strong hold possessed by Time Warner, a company worth $44.5 billion market capitalization.
Here another theory is being put behind improbability of Altice taking over Time Warner. Analysts are of the belief that the French company might not be able to take the deal to a conclusion due to financial constraints. The company made record buyouts in the past year; however is debt ridden of 18.78 billion pounds reported in the first quarter. Still, the company is certain of being able to pull off the deal and of expanding its reach to one of the largest cable and broadband U.S. markets post France and Caribbean. The company has expressed its belief in association of cable and broadband operators with mobile companies which in turn will be able to offer higher priced plans to its customers including television, broadband, fixed line and mobile services all together. The deal though will have to pass through regulatory approval, and might as well be opposed by the anti-trust review from the justice department.
The attractive U.S. market-
This is not the first time any foreign country has tried to get hold of the market in the U.S. Talking of the telecommunications market in particular, before Altice, a company owned by Xavier Niel, Iliad SA, tried to take over T-Mobile U.S., which could have materialized. If Altice is able to crack both the deals, which might as well prove to be a jackpot, it will pave the way for a strong foothold in the market by the company.
