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Rebranded: Goodbye Suddenlink and Cablevision/Optimum, Hello Altice

Phillip Dampier May 25, 2017 Altice NV, Cablevision, Consumer News, Suddenlink No Comments

Patrick Drahi’s acquired cable properties in the United States will join a global rebranding under his company’s own brand: Altice.

Suddenlink, Cablevision/Optimum, SFR-Numericable (France), HOT (Israel), Portugal Telecom-MEO-Sapo (Portugal), and Orange-Tricom (Dominican Republic) will all be called simply “Altice” by the second quarter of 2018.

Cablevision’s Lightpath commercial service will be rebranded “Altice Business” as well.

The global rebranding has begun before Altice USA launches its IPO, expected to attract $1 billion or more that will likely be used to help finance the acquisition of other American cable companies.

Along with a new logo, Altice also introduced its new tagline: “Together Has No Limits” — ironic for a company that continues data capping its Suddenlink broadband customers. Drahi delivered lofty remarks about his aspirations for the new logo and tagline during a closed circuit presentation seen by employees in all the countries where he owns cable companies.

“Our innovations must not make our individual realities smaller, but our collective ambitions greater,” Drahi said. “Not to make individuals more dependent on technology, but more reliant on each other. ‘Together Has No Limits’ is an invitation from the Altice family to come together and build a dream engine that unlocks all of human potential. Together has no limits means ‘let’s learn together, let’s be safe together, let’s be knowledgeable together, and please let’s enjoy!'”

It’s all a part of Drahi’s master plan to dominate the cable and telecom marketplace in the United States. He has freely admitted Altice has started small, but is in no way done making acquisitions and forcing future mergers. In Drahi’s own words, he’s not interested unless he runs the #1 or #2 largest telecom company in a country.

Drahi’s recipe for acquisition success is paying handsomely for acquisitions and then gutting expenses and much of the workforce Drahi considers unnecessary or redundant. After paying $17.7 billion for Cablevision — an amount his critics called excessive, Drahi slashed salaries, closed call centers, and began obsessively scrutinizing expenses. Employees complain morale is low and even the most mundane tasks like keeping the employee break room up and running now requires justifying almost every purchase in management committee meetings that employees fear. Drahi jettisoned much of Cablevision’s senior management, if only because he deemed them overpaid.

Drahi

Extravagance was never a word used to describe Suddenlink. The smaller operator Drahi also acquired in 2015 is known for serving smaller, more rural and economically distressed markets. But Drahi remains obsessed about cost-cutting there as well.

Wall Street analysts scoffed at Drahi’s claim he would cut nearly $900 million in costs at the two American cable companies. But thanks to his “cut to the bone” strategy, Drahi has touted about $400 million in savings to investors so far, with more to come. While Drahi claims he likes to pay employees “as little as possible,” he has no problem splurging on new acquisitions and upgrading the ones he already owns. To allow his Cablevision property to stay competitive against Verizon FiOS, Drahi has authorized ripping out existing coaxial cable and moving to an all-fiber network instead. Speed upgrades are also underway at Suddenlink that now deliver faster speeds than the much-larger Charter Communications now offers its customers.

In March, Drahi acquired Teads, the number one video advertising marketplace in the world. He intends to precision-target audiences with relevant advertising, which could enhance revenue at his cable TV and online properties. Altice has also been beefing up its content operations, particularly in Europe where Drahi has decided to launch his own cable networks instead of overpaying for other companies’ networks. Domestically, Drahi sees value in expanding Cablevision’s News 12 Networks operation and will import i24, his Tel Aviv, Israel based international 24-hour news and current affairs network to the United States.

Just as he has done in Europe, Drahi has telegraphed how he intends to do business in the U.S.

“I have always been very clear, that first is fixed [cable], then mobile, then content,” Drahi said. “We started in the U.S. with cable. We are too small in cable to go mobile at the moment. But everything is open. We will see.”

Altice Doesn’t Like Paying a Lot for Cable Networks So It Starts Its Own: ‘My Cuisine’ Launches in June

Phillip Dampier April 20, 2017 Altice NV, Consumer News No Comments

Jamie Oliver

Altice dislikes the cost of cable programming, so the media and cable empire is increasingly turning in-house to launch alternative channels it owns and operates.

In Europe, Altice will launch its own cooking channel “My Cuisine” starting in June.

Offre Media reports the network will initially be distributed in Belgium, France, Luxembourg, and Portugal, but Altice is known for exporting its cable networks across its vast cable empire. The new channel will be accompanied by a print magazine with a digital version, a mobile app, and ongoing recipe blog.

Programming will originate in Altice’s network studios and from a programming partnership Altice has with FreemantleMedia, which is contracted to produce cooking-related shows with Jamie Oliver for at least three years.

My Cuisine will be available on SFR-Numericable in France, Belgium, and Luxembourg and will be made available to cable systems in Switzerland and Francophone Africa.

It will be the second foray into cooking channels by Altice, which already operates one for customers of Hot Cable in Israel.

Altice owns and operates Cablevision and Suddenlink in the United States.

Drahi’s Acquisition Quest ’17 – Altice Could Seek Up to 30% Of U.S. Telecom Market

Patrick Drahi

“If he can succeed with a corporate-friendly Trump Administration and his lackey Republican legislators and regulators, Patrick Drahi’s Altice could seek to own or control up to 30% of the American telecoms market,” said A.W. Dewalle, a researcher studying Altice’s unprecedented acquisition-frenzy across the world’s telecommunications marketplace. “His IPO in the land of Uncle Sam is just the first shot and it will make a lot of executives very rich and consolidate America’s cable industry.”

Wall Street banks are clamoring for a piece of Altice’s initial public offering, announced this week. The big winners, who will split substantial fees paid to advise Altice USA, are Goldman Sachs, JP Morgan, Morgan Stanley and Citi. The IPO will allow the Drahi-controlled Altice USA to raise money for further acquisitions in the United States and to potentially restructure its existing debt, run up acquiring Cablevision and Suddenlink.

Reuters reported that Drahi’s biggest U.S. shareholders — BC Partners and the Canadian Pension Plan Investment Board will use the IPO as an opportunity to sell some of their combined 30% stake in Altice USA, giving Drahi further assurance he will stay firmly in control of the American operation as he takes on new investors.

Les Echos reports Drahi’s pattern is a familiar one for a man in a hurry to take a much bigger stake in the American telecom market, where profits are high and competition is relatively low. By raising additional funds, Altice USA can show financial strength as it appeals to bankers to loan it the billions in will need to acquire existing cable (and potentially phone) companies. If Altice uses some of the money to repay its existing $20 billion U.S. debt, that could also win the company favorable interest rates on its future loan portfolio.

Drahi is an acquisition specialist, having bought more than 30 companies to add to his Altice portfolio since its start in 2002. Low interest rates, favorable banking terms and corporate deregulation have fueled the shopping spree. With the election of Donald Trump in the U.S., Altice is convinced the sky is the limit when it comes to mergers and acquisitions.

“Everything about his government and the people he has put in place at regulatory agencies says deregulation, ‘laissez-faire,’ and consumers beware,” said Dewalle, a point echoed in part by the Financial Times.

The election of Donald Trump has lifted expectations among chief executives that it will be easier to consolidate companies in the telecoms, media and technology (TMT) sector, as the Republican president has a more laissez-faire approach towards competition. Many media and telecom players are under pressure to boost margins and find new growth avenues, while facing declining sales, according to a senior banker in the industry. “M&A might be the only option for many companies in this sector and Altice will certainly try to play a big role in this,” said [one] banker.

Altice is already laying the public relations groundwork to convince skeptical legislators and regulators that an Altice buyout is not bad news for customers. Altice is spending millions to scrap Cablevision’s existing hybrid coax-fiber network for a 100% fiber to the home replacement. Other upgrades are also ongoing across Suddenlink’s footprint.

Because the American telecom marketplace is not nearly as competitive as the one Altice faces in Europe, Americans are accustomed to paying for broadband and television services at prices that would be scandalous in France. The excess profits earned in America can help Altice finance fiber upgrades in its more competitive European markets. Altice confirmed this week it planned to invest more in 4G wireless upgrades for its SFR division in France and will cover 22 million French homes with fiber to the home service by 2022 and 5.3 million homes in Portugal by 2020.

How big will Mr. Drahi seek to get in the United States? He testified before the Economic Affairs Committee of the French Senate last June, telling legislators he owns or controls about one-third of the French telecom market. In the United States, he controls just 2%, leaving plenty of room to grow.

French business experts predict Drahi will initially seek to sweep up the remaining independent cable operators in the States into the Altice empire before turning attention to a big player like Comcast or Charter Communications, the largest and second-largest American cable operator respectively. Publicly traded companies like Cable ONE would be the first prime targets for an Altice buyout. But Drahi could also repeat his Cablevision acquisition by offering a premium price for privately held operators like Cox Communications, which has a presence in larger cities, and Mediacom — which provides service in 23 states and has a big presence in the midwest.

Most of the rest of America’s independent cable operators are small, regional operations serving smaller communities. Drahi has his choice of these kinds of operators that include Adams Cable, Armstrong, Atlantic Broadband (owned by Canada’s Cogeco), Blue Ridge Communications, Buckeye Broadband, Hargray, Midco, Northland, Service Electric, TruVista, Wave Broadband (exploring a sale), and WOW, among others.

Thus far, Drahi has not shown much interest in acquiring telephone companies, so analysts expect him to confine his acquisitions to the cable business. Even if Drahi acquires a substantial cable portfolio in the United States, he will argue he still faces competition from telephone companies in those same service areas. What Drahi won’t do is compete from the ground up by building a competitive cable system to face off against a firmly entrenched American duopoly.

“That would be bad for business,” said Dewalle.

French Press: U.S. Consumers Ripe for Fleecing By Cable Magnates Like Altice’s Patrick Drahi

The French press continues to report, with some bewilderment, that U.S. consumers are being fleeced by the country’s biggest telecom companies while politicians do nothing to regulate a duopoly market or force more competition to stop the pick-pocketing. The Francophone press is responding to reports that cable baron Patrick Drahi is vacuuming up profits from his American subsidiary Altice USA — which owns Cablevision and Suddenlink — and is likely to get much bigger in 2017, all thanks to the U.S. regulatory landscape.

“Americans live under a corrupt politician-sanctioned broadband monopoly in many places, and this assures telecoms operators in the United States can earn astounding profit margins impossible in European markets,” notes Giga France.

Le Figaro reported this month Altice’s directors had an easy job figuring out where much of the global conglomerate’s future profits would come from: the United States.

“Given the structure of the telecom market, [Altice’s] margin for growth in France is low, whereas in the United States it is considerable,” the newspaper reported. The reason is a persistent lack of competition, made possible by politicians that accepted the recommendations of lobbyists and corporate special interest think tanks on how to structure the broadband market.

Drahi

In the United States, providers have won near-absolute control of their networks and need not share access with competitors. Large telecom companies argued that requiring shared access to their infrastructure would threaten investment and stall broadband network deployment. Ironically, some even argued it would lead to reduced competition. But the reverse turned out to be true and the United States has fallen far behind in competition and network quality, while more traditionally regulated markets in Europe now enjoy low prices, faster internet speeds, and a larger number of competitors vying for consumers’ business.

Wall Street indirectly conspires to keep the status quo by discouraging the entry of new fixed line providers, claiming it will destroy shareholder value and consume billions of investor dollars constructing competing networks that will be unlikely to attract enough subscribers fast enough to give shareholders a timely return on their investment.

With a provider-friendly Trump Administration in power, and more importantly the installation of Ajit Pai, a notorious telecoms-friendly regulator as chairman of the FCC, Altice’s directors consider 2017 to be one of the most inviting years for expansion in the United States.

Le Figaro reports there is plenty of opportunity for Altice’s empire to become more dominant in North America. In France, its SFR unit now holds a 25% share in the fixed line market, but that number is unlikely to grow much considering ongoing price wars that come from fierce competition in France. In the U.S., Altice only holds barely 3% of the market, and Drahi has made no secret he would like to become at least the second-largest provider in the United States.

Les Echos suggested Altice is quietly preparing a full-scale ambush on the U.S. market starting with a much-anticipated IPO expected this year. Wall Street doesn’t welcome Altice entering the U.S. cable business as a market disruptor. Instead, investment banks are willing to loan huge sums to Altice for the purpose of acquiring telecom companies, maintaining the existing duopoly of one cable and one phone company for the majority of Americans.

“In the past, every time he introduced a publicly traded asset, Drahi proceeded with acquisitions: Numericable, in 2013, SFR the following year; and by 2015 Cablevision and Suddenlink in the U.S.A.,” reports Les Echos.

In France, up to four providers compete head to head for fixed line telecom customers. In other parts of Europe, telecom networks are often forced open to competitors. Neither is the case in the States, and consumers are paying very high telecom bills as a result.

Les Echos notes the U.S. cable business is so lucrative, “never before has a French company made such an important investment in the country of Uncle Sam.”

Suddenlink and Cablevision: Consistent source for fat revenue growth for Altice.

Drahi told investors more than a year ago he wanted to eventually generate 50% of Altice’s business overseas, primarily in the profitable U.S.

Altice has so far only bought up smaller cable operators, but observers expect Drahi will aim for much larger targets, including the possibility of buying out a wireless provider or even targeting Comcast, AT&T, or Charter. Les Echos quotes Vincent Maulay, an analyst at Oddo who notes that Drahi may be able to collect future assets inexpensively if Verizon decides to move on an acquisition of Charter. Regulators will likely force the combined company to shed cable assets in New York State where Verizon and Charter currently compete. That would allow Drahi’s Cablevision to pick up divested service areas, perhaps even in Manhattan.

Altice’s Cost Cutting Truth: 2.5+ Million Customers Fled for the Hills

Phillip Dampier January 24, 2017 Altice NV, Cablevision, Consumer News, Suddenlink No Comments

In 2016, just one company was responsible for more than half of all consumer complaints aimed at telecommunications companies in France. That provider was Altice-owned SFR/Numericable.

Last year alone, the number of complaints against Patrick Drahi’s telecom conglomerate jumped 120%, with consumers upset about the company’s landline, wireless, cable TV and broadband services, according to data from the French Association of Telecom Users (AFUTT) and noted by Capital.

The biggest spike in complaints targeted the company’s wired broadband services, where complaints rose 166% (in contrast, mobile complaints were up a milder 72% over the year before).

AFUTT records out of more than 5,000 complaints received last year, 73% of all contract complaints, 68% of customer service complaints and 66% of complaints about bait and switch promotions regarded Mr. Drahi’s operations in France.

Patrick Drahi’s business philosophy, backed by billions in Wall Street bank loans used to acquire companies and then slash budgets to the bone, proved to be terrible for his customers in 2016. Cablevision and Suddenlink subscribers can only hope those mistakes won’t be repeated here.

In just over two years after taking over one of France’s largest cell phone and cable operators — SFR/Numericable, more than 2.5 million customers have fled, fed up with Drahi’s initial lack of interest spending money on network upgrades and service improvements. It didn’t help that the prior owner — the conglomerate Vivendi — didn’t invest enough either, leaving the French cell phone company with headline-grabbing service outages, indifferent customer service, and a fear of employee suicides from threatened cutbacks and layoffs.

Even investors and the banks financing Drahi’s worldwide conquest of cable and telecom companies were concerned enough to apply pressure to stem customer losses that continued at a record pace for more than six months. The damage to SFR’s reputation has been so great, the wireless company has experienced two very bad years even with $2.3 billion in emergency spending to keep customers happy with service improvements while trying to win others back.

Paulin

Michel Paulin, in charge of SFR, told employees in an internal memo obtained by Les Echos things are still bad at the company.

“We have to face it: our customers are still not satisfied and far too many are still leaving for other operators,” Paulin wrote. “This year we will have to regain the confidence of our customers, but we will also have to return to growth in fixed and mobile broadband.”

That growth is still expected to come at the expense of jobs. By the summer of 2019, Drahi will have presided over the slashing of more than one-third of the SFR/Numericable workforce, amounting to at least 5,000 French workers. Many of Altice’s most recent investments are in content agreements to bolster programming for subscribers. SFR launched five sports channels, two news and information channels, and has spent heartily to acquire sports rights and programming agreements with American networks including NBCUniversal and Discovery.

Altice is also dramatically increasing spending on its news channel i24 News, which will soon be on the lineups of Cablevision and Suddenlink cable television customers. The news channel broadcasts multiple feeds in French, English, and Arabic and will supply viewers with international and Middle Eastern news, particularly focused on Arab countries where Al Jazeera delivers fierce competition.

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