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Altice Deploys Gigabit Broadband in Arkansas, Missouri, and Texas

Phillip Dampier July 19, 2017 Altice NV, Broadband Speed, Consumer News, Suddenlink No Comments

Altice’s Suddenlink Communications has announced gigabit service for its customers in Batesville and El Dorado, Ark., Maryville, Mo., and Conroe, Tex.

“Today’s announcement is the next step in Altice USA’s Operation GigaSpeed initiative to provide gigabit broadband service to our Suddenlink customers,” said Hakim Boubazine, co-president and chief operating officer of Altice USA, in a statement.

Altice will continue to use DOCSIS 3.0 technology for most of its Suddenlink customers instead of adopting DOCSIS 3.1 in the near future. Because Suddenlink systems are all-digital, Altice is using a significant amount of its available cable bandwidth for broadband services. Customers who don’t want to pay for 1,000Mbps can also choose from 100 and 200Mbps plans, up from 75 and 100Mbps respectively.

These communities bring the number of GigaSpeed enabled cities in Suddenlink territory to 45. Here are the others, below the break:

… Continue Reading

French Media: Altice’s Big Bad Wolf Hits the U.S. Running

Phillip Dampier June 26, 2017 Altice NV, Consumer News No Comments

Patrick Drahi is about to take American investors for a ride. Unfortunately, some won’t survive the journey.

“The only merit of American cars is that we can carry corpses in the trunk without having to fold their legs,” wrote French crime novelist Frédéric Dard, as noted in a piece in Les Echoes. Ironically, the French newspaper notes, the transport of “stiffs” is perfectly legal on Wall Street, where the art of the deal is often more important than its outcome for investors that take a bath.

This time, Mr. Drahi is taking advantage of Wall Street’s ability to Think Big with other people’s money. The newspaper notes he is not loading the trunk more than average, at least for the United States. “From Twitter to Snap, investors are used to swallowing the ‘private equity’ snakes as long as it delivers an outstanding success like Facebook from time to time.”

While Europe looks on with astonishment at the audacity of Mr. Drahi’s big splash in the States, the newspaper notes American investors don’t seem to notice Mr. Drahi has popped his trunk open on them even as he showers current shareholders with $1.28 billion in dividend payouts as the company constantly attempts to refinance its enormous debts. Altice’s two biggest financial allies, a Canadian employee retirement fund and BC Partners, seem more than happy unloading half their stake in Altice USA during the recent IPO, transferring their exposure to Drahi’s wily ways to someone else.

In the ultimate example of “heads I win, tails you lose” business practices, Drahi has well insulated himself from his own investors and from any consequences for his future mistakes. Les Echoes notes that as part of the complex backing away of Drahi’s North American partners, 98.5% of the voting rights will be conferred not to the buyers, but to Altice itself. Altice will also collect a breathtaking $30 million in fees from the unload. Not to be outdone, Altice’s top three executives are also constructing an elaborate protective cocoon for themselves. In the event of any damage control that changes Altice’s control of ownership, the three get more than $70 million in bonuses.

The newspaper later wrote Altice’s IPO was the latest example of the complacency of the U.S. stock market.

“Altice does not hide its vocation of feeding the great appetite for concentration of cable in the United States,” the newspaper wrote. “The telecoms tycoon passed the final test of entry into the temple of stock market temples.”

While Drahi promises great upgrades that will require considerable investment, his actual record of spending is more mixed than his ambitious statements would otherwise suggest. Upgrades at his acquisition SFR-Numericable languished for years as the company’s attention was more focused on making additional acquisitions, usually with borrowed cash. More than one million customers left while waiting for upgrades, even as service continued to deteriorate.

Back in France, some shareholders are pushing back over what they feel is Drahi’s personal conflict of interest, which may make him very rich off their money.

Last week, activist fund CIMA, a minority shareholder of Altice’s SFR wireless company, filed a complaint with the Tribunal de Grande Instance (TGI) in Paris, noted Le Figaro.

Altice Name Change Will Personally Profit Drahi

CIMA claimed that by 2018, all of Drahi’s acquisitions will be consolidated under the Altice brand. Oddly, Drahi is willing to toss away the SFR brand, which is widely recognized in France and worth an estimated €904 million, and replace it with Altice — a name hardly known inside or outside of France.

“Altice has no commercial recognition,” says Catherine Berjal, co-founder of CIMA.

But then that misses the fact Altice’s trademark is held personally by Drahi and he won’t be offering it for free. Every company owned by Altice will be required to pay unspecified annual royalties to Mr. Drahi starting three years from now, just to license the use of the Altice name.

Making Someone Else Pay Your Fine

When Altice was caught violating French competition regulations, it was fined €80 million by France’s Competition Authority. SFR shareholders were unpleasantly surprised to discover SFR alone covered the fine, despite the ruling which found Altice and SFR equally liable.

Drahi the Landlord

SFR headquarters, Saint-Denis

Finally, some shareholders are scrutinizing SFR’s sudden decision to relocate its corporate headquarters, despite signing a 12-year lease in 2013 for brand new offices in Saint-Denis, priced at €490 per square meterBerjal notes this sudden move doesn’t make any business sense, until one digs a little deeper.

“Patrick Drahi has decided to break this lease to move SFR into a building that belongs to him personally,” Berjal said, adding the move will result in a spectacular rent increase. “The rent is 725 per square meter [at Drahi’s property], not to mention the contract termination fees that have to be paid [to the old landlord].”

CIMA feels Drahi isn’t exactly representing the best interests of shareholders, just himself.

“The operations mentioned in this complaint were perfectly legal and in compliance with the applicable rules of governance,” countered a spokesman for SFR contacted by AFP.

Drahi’s Ultimate Compensation Package: $43 Billion+

The Wall Street Journal has been tracking Drahi’s dreams of being one of the world’s most richly compensated CEOs, perhaps the richest ever.

Even the most casual investor couldn’t turn a blind eye to Drahi’s original plan for personal compensation, which would have given him $817 million in compensation over five years simply by paying him a management fee of 0.2% of revenues plus a performance fee of 5% of increased cash flows, which was child’s play to accomplish with additional acquisitions or rate hikes. One minority shareholder balked, complaining this kind of compensation was “too easy to achieve.”

Plan “B” could redefine CEO greed for years to come. In addition, to Drahi’s outstanding stock options, worth €55 million at the current stock price, Drahi would keep his 59% ownership of Altice, a stake currently worth €19 billion today. If Drahi manages to triple the share price, his net worth automatically increases another $43 billion dollars. But Drahi is also asking for a bonus: another 30 million shares of Altice stock to be awarded to him automatically. The first 10 million shares automatically are his if he is still alive and breathing at Altice in 2020. Another 10 million shares show up if the share prices doubles by then, and yet another 10 million go into his portfolio if the share price triples by the end of 2021. That represents another €1.1 billion on top of the $43 billion.

That may be why some in the French press have dubbed Drahi the “Big, Bad Wolf.” Les Echoes notes Wall Street has never particularly minded this kind of wolf, as long as it confined itself to eating consumers. But Drahi’s desire to also drain his investors is what the newspaper cautions is a “big bad wolf none would have expected.”

As Expected, Altice’s IPO Raising Money for Possible Cox, Mediacom Acquisitions

Altice USA today revealed the terms of its long-expected initial public offering likely to bring more than a billion dollars to the company’s merger and acquisition fund that many Wall Street analysts now expect will be spent to acquire privately held Cox Communications and/or Mediacom.

Cox has long claimed it is not for sale. But Altice founder Patrick Drahi has a history of being willing to overpay for the companies he covets, including Cablevision, which was a reluctant seller for at least a decade before Altice made an offer the Dolan family that founded Cablevision couldn’t refuse.

Telsey Group analyst Tom Eagan told his Wall Street clients he expected Altice would be “active” in American cable consolidation, with Cox and Mediacom systems being likely targets. Other analysts have downplayed potential interest in Cable ONE, another likely target, because of the company’s recent aggressive rate increases and the fact its systems are often in economically depressed areas. An acquisition of Cox and/or Mediacom would make Altice the third largest cable company in the country, but it would still be far behind Comcast and Charter Communications, which hold first and second place respectively.

Any acquisition would likely not get much scrutiny on the federal level by the FCC and Justice Department, and most states would likely give the deal only a perfunctory review before approving it.

Altice USA has applied to be listed as “ATUS” on the New York Stock Exchange.

Cablevision Class Action Lawsuit Filed Over Cancellation Policy

A class action lawsuit has been filed in New York alleging Cablevision’s new owner — Altice USA, illegally changed the terms and conditions of its cancellation policy without adequate notice and was unjustly enriched charging millions for service departing customers did not receive.

New York resident Christopher Krafczek discovered he was still being billed for Altice’s Optimum cable service after canceling his service. He was caught in Altice’s change of its terms and conditions that took effect Oct. 10, 2016, which declared in all-capital letters Altice doesn’t give refunds for customers electing to cancel service before the end of a billing cycle:

Monthly Charges: Your monthly subscription begins on the first day following your installation date and renews thereafter on a monthly basis beginning on the first day of the next billing period assigned to you until cancelled by you. The monthly service charge(s) will be billed at the beginning of your assigned billing period and each month thereafter unless and until you cancel your Service(s). PAYMENTS ARE NONREFUNDABLE AND THERE ARE NO REFUNDS OR CREDITS FOR PARTIALLY USED SUBSCRIPTION PERIOD(S).

Krafczek and his attorneys are taking Altice to court claiming the cable company broke New York’s General Business Law § 349 for deceptive practices and for unjust enrichment. The class action lawsuit claims the cable operator failed to provide proper written notice of the change in its billing practices.

Customers canceling service before the end of a billing cycle can incur $100 or more in charges for cable service no longer received after turning in cable equipment as part of a move or to switch providers.

Altice is likely to claim Krafczek has no standing to bring the case because Cablevision/Altice subscribers are bound by a mandatory arbitration provision in their subscriber agreement. If a customer did not send Altice a written opt-out request within a limited window of time when mandatory arbitration was first introduced, Altice will likely claim that customer cannot sue or participate in a class action lawsuit.

Company officials told the Asbury Park Press last fall subscribers were given advance notice of the change of terms. A spokeswoman told the newspaper Cablevision included the change of terms notice in several monthly billing statements. The spokeswoman also claimed customer service representatives are trained to tell departing customers that billing would continue until the end of the billing cycle, allowing customers to schedule a disconnect at that time.

The case seeks a minimum of $50 or greater in damages for each class member, based on the amount billed after disconnecting service, attorney fees, and punitive damages.

The lawsuit claims customers in New York, Connecticut, and New Jersey who voluntarily disconnected cable service between October 2016 and May 3, 2017 paid more than $5 million for service they did not want to continue receiving.

The law firm of Mayer Brown LLP is handling the case.

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.”

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  • Josh: Good grief. If they still have money, they HAVE to spend...I mean it's probably too late, but...what on Earth is wrong with these executives? I mean...
  • Paul Houle: The scary thing is that Frontier has a huge cash flow. There are still enough customers that use Frontier because they don't have a choice. "Cable" ...
  • Robert: Cox sucks...
  • Dan: The high dividends aren't a problem anymore, but there's probably not enough money to do more than pay off the interest. If they were smart, they'd st...
  • BobInIllinois: Reminder---July 1 2010, Frontier took over Verizon properties in 13 states, including my DSL account in Illinois. Took them 3 months to send me a bi...
  • LG: Same as Christopher's post above. Great work. The longer this goes on, the more I believe regulation and laws alone will not be enough. I'm thinkin...
  • Paul Sheehan Jr.: Why doesn't WGBH move to ch. 44 and WGBX go off air and what is the future for wbts-lp in boston...
  • Josh: What the frak are they doing? For the past couple of years I've been assuming the top executives are just trying to get payouts, then jump from the c...
  • Dan: Don't you mean "a small independent phone company in Rochester?" Frontier didn't begin as SNET....
  • Joe V: I almost pity poor Randall and those that think that this "5G" will good enough once cord cutting internet streaming TV becomes the norm. AT&T's ...
  • MD: It only goes to 30, I know what it is technically capable of because they replaces all of the cables on the entire street, and the previous TWC cable ...
  • LG: Yet more pandering to the overpriced, lightly used cell data services. The ISPs love it because they can take out a TV ad and say... "Our service is ...

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