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Suddenlink Closing Call Centers, Adds New Paper Billing Fee

Phillip Dampier July 20, 2016 Consumer News, Public Policy & Gov't, Suddenlink 1 Comment

unemployedAltice’s ongoing efforts to cut expenses and boost profits at Suddenlink will cost an unspecified number of call center workers their jobs in three states and customers will soon pay a fee to receive their cable bill in the mail.

In three separate announcements, Suddenlink has begun notifying employees at three separate offices that many will be out of their jobs by this fall as the company shutters call centers and sales offices in Greenville, N.C., St. Joseph, Mo.,  and Parkersburg, W.V.

“We are migrating call center activities to some of Suddenlink’s larger call centers in the U.S. based on call volume, and where we have the greatest number of business partners,” said a company news release.

All of Suddenlink’s sales jobs will now be in Texas, and that means sales employees in the company’s Parkersburg office were given two choices: move to Texas, or take a different job in the Parkersburg office.

St. Joseph area employees were told their jobs will be relocated to larger call centers elsewhere where Altice has spent money to improve customer care.

“We have invested in advanced customer-care technology in those locations, and based on that believe this new structure will enable us to provide a superior service experience to all of our customers,” said Suddenlink spokeswoman Lisa Anselmo.

SuddenlinkLogo1-630x140This summer Suddenlink is also continuing incremental rate hikes for customers not already subject to them. Parts of North Carolina are the latest to face a new $1 billing fee, which began July 1. New customers already pay the fee, but now current customers will also face the extra charge if they want a paper statement mailed to them.

“This fee covers the handling and postage costs associated with providing a paper statement,” said spokesman Gene Regan, senior director of corporate communications.

Notification of the new fee went out in the company’s May and June billings. To avoid the fee, customers must opt-in to electronic billing by visiting the company’s paperless billing web page and logging in to their Suddenlink account.

“What we are finding is more and more people in recent months have gone to electronic billing. A lot of customers have made the change in recent months,” Regan told The Daily Reflector. “Today so many people are online, more and more people are online, and a lot of people don’t like to deal with paper mail. They like the convenience and the opportunity to use other ways to pay.”

August

August

But many customers would prefer the option of a lower cable TV bill.

In Louisiana, Lake Area residents continue to complain about Suddenlink’s business practices, especially rates, channel options, and equipment fees. City councilwoman Luvertha August told American Press she is inundated with complaints about the cost of cable television in particular.

“All of these comments are from senior citizens. They’re on fixed incomes and they have limited budgets,” August told the newspaper. “They’re concerned with what they deem are constant changes with the Suddenlink cable company.”

Seniors have been confronted with cable TV bills that have soared from $20 two decades ago to over $80 in many cases today. This month Suddenlink completed its all-digital transition in southern Louisiana, which requires customers to attach equipment to every cable-enabled television in the home, at an additional cost.

The Leichtman Research Group, which specializes in research on broadband media and entertainment, found today’s average cable-TV bill is just under $100 after fees, surcharges, and taxes are included. Seniors who have seen no significant increase in their Social Security checks for several years are hard-pressed to pay for channels they don’t want or watch.

Last year, August attempted to involve the state’s legislative delegation to coordinate a message that consumers want more options, including a-la-carte for cable television. Her effort found almost no interest from state and federal lawmakers representing Louisiana, many who receive substantial campaign contributions from telecom companies. Sen. David Vitter (R-La.) did respond, but falsely claimed cable television is a state matter and the “federal government had nothing to do with the issue.”

In fact, many members of Congress have asked the FCC to get involved in the issue and others have supported efforts to increase competition and push for mandatory a-la-carte channel choices for consumers. AT&T U-verse has a franchise in southern Louisiana and may offer some consumers a choice, but after AT&T completed its acquisition of DirecTV, many consumers report AT&T is marketing satellite television more aggressively than its own U-verse TV option.

Patrick Drahi: Protecting Jobs Now Only Delays the Need to Cut Them Later

Patrick Drahi's vision of unwanted employees he'd like to lay off.

Patrick Drahi’s vision of unwanted employees he’d like to lay off.

Patrick Drahi, who oversees a global telecom empire that now includes Suddenlink and Cablevision in the United States, is quietly seething over the regulators who forced him to accept commitments not to kill jobs at the companies he’s acquired. To him, an unwanted Altice employee is nothing more than a washing machine ready to be tossed out after outliving its usefulness.

Drahi points to his French wireless company SFR as a prime example of how job protection agreements are bad news for his business plans. In Drahi’s view, SFR, like many of the companies he has acquired, is overstaffed. But he cannot slash jobs for three years because of regulator conditions imposed when acquiring the company.

“We have one year left on our guarantee of employment for three years,” Drahi told investors in New York. “Today we’re in a situation where people know that the guarantee stops in one year. It’s like buying a washing machine from [home good retailer] Darty with a three-year warranty. After three years the washing machine breaks down. What should we do, [pay for it to be repaired]? They know we’re overstaffed.”

In Drahi’s view, the unnecessary employees are just a drain on company’s resources, something their competitors are fully aware of and are ready to exploit. Drahi said the protected employees also create tension in the company. Their union representatives claim the opposite, arguing Drahi’s draconian cost-cutting makes for a hostile workplace where employees often have to take pay cuts and in some cases pay for their own toilet paper, office supplies, and break room equipment out-of-pocket. As a result, as many as 1,200 employees have already voluntarily left SFR for other jobs. In many cases, those vacant positions were never filled again, helping Drahi achieve desired job cuts through other means.

Drahi’s cost cutting even extends to the top. He admitted he was able to convince the current managers of Cablevision and Suddenlink to cut their salaries while suggesting they could share in the long-term profits of the companies sometime in the future.

Digital Sub-Channels, Cost-Cutting Cause Havoc for Adjacent Market Cable-TV Carriage

wbngTime Warner Cable subscribers in Otsego County, N.Y. have been able to watch WBNG-TV, the CBS affiliate in Binghamton, since there has been a cable company called Time Warner Cable. But as of yesterday, that is no longer the case. In Baxter County, Ark.,  Suddenlink customers suddenly lost KARK (NBC) and KTHV (CBS), two stations from Little Rock, after the cable company decided it would henceforth only carry KYTV (NBC) and KOLR (CBS) instead. Part of the problem for subscribers is those two stations are located in Springfield, Missouri, a different state.

Time Warner Cable wasted no time yanking WBNG off the lineup of their Oneonta and Cooperstown cable systems. WBNG received a letter informing them of the decision on June 16. Two weeks later, the channel was replaced with WKTV from Utica, which is a secondary affiliate of CBS (WKTV has been an NBC affiliate for decades, but through the use of digital subchannels, WKTV has managed to lock down affiliations with CBS, NBC, CW, and Me-TV). Time Warner argues Otsego County is in the Utica television market, such as it is, so there is no reason to spend more to put Binghamton stations on the lineup as well.

Oneonta, N.Y. is located between Binghamton and Utica.

Oneonta, N.Y. is located between Binghamton and Utica.

karkAnother cable company with cost-cutting fever is Altice-owned Suddenlink, which stopped carrying the two Little Rock-based broadcast stations in northern Arkansas on June 7, leaving KATV (ABC) as the only central Arkansas-based news outlet on the cable provider’s Mountain Home-area system.

The decision to drop the two Little Rock channels was made at the corporate level, local employees told The Baxter Bulletin, and the Mountain Home office had no input in that decision and were not allowed to talk about it.

The mayor of Mountain Home sure is, however.

“We’ve had a lot of people calling in, coming by the office,” Mayor Joe Dillard told the newspaper. “Several have been in a couple times. I do not understand why we got two of our main channels in the state taken away.”

An authorized Suddenlink spokesperson finally admitted it was about the money.

“In recent years, local broadcast station owners have begun asking for increasingly larger amounts of money in exchange for allowing us to renew contracts to carry their stations,” said Gene Regan, senior director of corporate communications for Suddenlink. “To help keep down the costs of providing services to our customers, we have made the decision to drop out-of-market stations that duplicate network affiliations with other existing in-market stations.”

That policy has been gradually implemented in a growing number of Suddenlink-served communities, which are often exurban or rural towns located between two larger metropolitan areas. These are the areas most likely to receive multiple network affiliates from different nearby cities.

mountain homeSuddenlink has standing orders from Altice to look for savings wherever possible, but none of those savings are returned to subscribers. The loss of the stations has not reduced anyone’s cable bill and Suddenlink recently moved TBS and INSP — a Christian cable network — to a more costly Expanded Basic tier. In place of the two networks dropped from the Basic package are home shopping networks that actually make Suddenlink money – Evine Live and Jewelry TV.

“I’m disappointed,” Anna Hudson of Bull Shoals told the newspaper. “I have friends in Little Rock, in Batesville. I like to know what’s going on in Arkansas, not in Missouri. It doesn’t help when the Legislature is in session, that will not be covered by the Springfield stations.”

Told You: Altice Brings Its Special Kind of Cost-Cutting to Suddenlink and Cablevision

Phillip Dampier June 28, 2016 Altice NV, Cablevision, Consumer News, Suddenlink No Comments

cheapDespite vociferous denials to New York regulators that Altice’s unique way of cost-cutting expenses in Europe would mean the same in the United States, a Suddenlink employee in the Appalachians found herself visiting a nearby Kroger supermarket recently to pick up some “forever” postage stamps after the office’s postage meter machine stopped working.

“Nobody paid the bill, leaving us to raid petty cash to get some mail out,” the Suddenlink employee told Stop the Cap! “They got the problem resolved later that week, but this was only the most recent of several incidents that make it clear our new owner doesn’t like us spending any money.”

Suddenlink employees in West Virginia needed money to get a broken ice machine in their office fixed and got the third degree instead of a quick answer.

The Wall Street Journal reports during a March “investment committee” meeting, Altice’s bean counters pelted employees with questions about the nature of the ice machine business in the United States and whether it would be smarter to buy or lease.

“A complete waste of people’s time and energy,” said the former Suddenlink employee.

In North Carolina, call center employees are updating their resumes after watching job positions slowly get eliminated starting this past April.

“Since that time, rumors have been spreading that the call center [itself] may be closing soon,” shared another employee. “And if you’re paying attention the writing is on the wall that the rumors are true. But no one from upper management or corporate will share any information.”

SuddenlinkLogo1-630x140When Altice took over Cablevision, employees were stunned when top executives dined in the staff canteen on their first day after the deal closed. That was never the style of former CEO James Dolan and other executives who avoided hobnobbing with anyone too far from the executive suites. Dolan himself often used a helicopter to travel back and forth from the office, occasionally with bodyguards.

Charles Stewart, chief financial officer of Altice U.S., warns everyone better get used to it.

“[Cost discipline is] our whole philosophy,” Stewart said. “It triggers a discussion at a very nitty-gritty level, which is where the difference is made.”

atice-cablevisionWith a commitment to slash $900 million in expenses out of Cablevision alone during 2016, that’s a lot of discipline. Employees are echoing their French counterparts at Altice’s SFR-Numericable when they call life at Suddenlink and Cablevision “a culture of fear,” watching workers exiting each week without being replaced. Much the same happened in Europe, despite commitments not to engage in job-cutting. In both cases, Altice claims the slow but steady trickle of employee departures are “normal churn,” not layoffs.

Altice designed its “investment committee” to be an authoritarian hellhole on purpose. Those who dare to attend the weekly meetings, which extend for hours, face micro-scrutiny of every expense brought before it, with employees peppered with questions to justify their expenses. The same occurred in France, where Altice officials debated how often they should pay to vacuum the carpets and clean the restrooms.

Employees figure out soon enough it is easier not to ask (or to simply buy what you need on your own), before enduring a prolonged debate on mundane topics like using new or recycled toner cartridges.

“It creates consternation for about two months,” admitted Altice USA CEO Dexter Goei. “Then people realize, ‘Boy, I really don’t want to go to the investment committee. We just got 500 printers a year ago; we can probably extend their life one more year.’”

While Altice has a deal with regulators not to layoff “customer-facing” Cablevision employees in New York, it is already slashing one of Dolan’s pet projects: Freewheel, a Wi-Fi powered wireless phone, SMS, and data service.

Coming next: Channel Renewal Battles. Altice executives believe it’s time to declare total war on channel carriage costs, even it leads to prolonged channel blackouts.

“We have about half of our programming lineup that’s up for renewal very soon,” Goei said. “There are clearly a lot of channels that we’d like to get rid of.” But Goei also told the Wall Street Journal many of the networks he doesn’t want are part of broader programming deals that require all of a company’s channels to be carried.

So what is next? Altice has stated emphatically it wants to be either the largest or second largest cable operator in the U.S. That guarantees more acquisitions, probably beginning next year. Cox and Mediacom — both privately held — may decide not to sell, which means Altice will have to refocus on taking over Charter Communications, which itself just absorbed Time Warner Cable and Bright House Networks, or divert to making acquisitions in wireless — T-Mobile or Sprint, perhaps, or content, which likely means one or more Hollywood studios.

Altice Making Big Changes With Cablevision Purchase Now Complete

drahi stuffWith today’s completion of Cablevision’s absorption into the Altice empire, the European cable conglomerate announced big changes that are expected to refocus the “center of gravity” and Altice’s future profits on the United States instead of Europe.

Altice today becomes America’s fourth largest cable operator, serving 4.6 million customers in 20 states. But Altice is not finished empire-building, and is widely expected to target privately held Cox Communications for acquisition sometime next year.

To lay the groundwork for future expansion, current controlling shareholder Patrick Drahi is turning over leadership of his growing U.S. operations to trusted lieutenant Dexter Goei, who will be chairman and CEO of Altice USA. Goei’s first mission is to lead a team of fierce cost-cutters into the offices of Suddenlink and Cablevision and ruthlessly slash expenses. Much of those savings are expected to come from significant job cuts among Cablevision’s 14,000 workers, especially middle management, engineering, and administrative workers. Last fall, Altice told investors Cablevision’s workers in the high cost suburban New York area were ripe for cutbacks, with much of the work currently managed by six figure salaried Cablevision employees likely to be transferred to Missouri-based Suddenlink, which operates in smaller cities in low labor cost states where employees are paid considerably less.

Approval of Cablevision’s sale to Altice by the New York Public Service Commission was given with the requirement Altice is prohibited from laying off, involuntarily reducing or taking any action “intended to reduce (excepting attrition and retirement incentives) any customer-facing jobs in New York,” such as call centers or walk-in centers for a period of four years. But as Altice’s call center employees at France’s SFR-Numericable attest, that does not prevent Altice from closing current call centers and transferring those jobs to cheaper locations in New York staffed by those willing to work for much less.

drahi“The number of customer service agents is exactly the same, but their competency to handle customer problems, and their salaries, are not,” said Jean Libessart, whose fiancé lost a job with Altice after call centers were moved overseas. “They stayed within the competition authority’s rules by exploiting the loopholes.”

Altice is seeking cuts of “hundreds of millions of dollars” from Cablevision’s expenses within the first six months of ownership. After that, Drahi wants to earn 50% of Altice’s future revenue by refocusing the business on “the madness of margins” in the United States — a term that acknowledges the United States tolerates deregulated telecom duopolies that can raise prices at will, something European governments would consider to be unconscionable. Drahi noted there are just four super-sized telecom companies in the United States facing down smaller companies, many that agree not to compete in territories already served by other companies.

Les Echos notes France is the antithesis of the American model, with more than 100 competing mobile and wired telecom operators fighting for some of the same customers. The result is that telecom rates in France are the lowest in Europe. It’s hard for a billionaire to make billions more when he cannot raise prices. That is why Mr. Drahi is setting his sights on the United States, where constant rate increases are actually expected by consumers. Just as surprising to Europeans, the ever-increasing prices are tolerated by regulators and members of Congress that sometimes end up working for the same telecom companies they oversaw during their stay in Washington.

Drahi can usually find loan money to buy up more American cable companies, because those companies can raise prices to pay back the massive debts Altice has already accumulated during several years of spending sprees.

cablevision“In every country, my strategy is to be number one or two,” Drahi told a hearing of the Economic Affairs Committee of the French Senate this month. In France, Altice is already number two and it will be very difficult to pass Orange, the dominant leader in French telecom. In the United States, there is still plenty of room to grow. After the completion of the acquisition of Cablevision, Altice will only control 2% of the market, giving Drahi plenty of room to push towards at least 10% market share starting in 2017.

Drahi originally had no intention of waiting even a year to further consolidate the U.S. cable market, but financial markets trembled over the €50 billion debt Drahi’s companies have amassed. The new line is that Altice will wait until next year before it acquires more companies in the United States, to give it a chance to properly merge Suddenlink and Cablevision into a more efficient operation.

“We want get bigger in the U.S., but I don’t know when, clearly not in 2016, which is the year of integration of our assets and operations,” Goei said in a recent interview. “Thereafter, you’d be surprised if we didn’t do anything, but we’re not going to buy things at stupid prices.”

Wall Street analysts are not so sure. More than a few believe Altice vastly overpaid for both Suddenlink and Cablevision. Many believe Drahi will have to be extremely generous to bring Cox Communications into the Altice family as well.

Altice Caught in Panama Papers Scandal; Tapping Junk Bond Market (Again) to Raise Quick Cash

drahiPatrick Drahi’s Altice — new owner of Suddenlink and presumed next owner of Cablevision — has been caught dealing with the scandalous Panamanian law firm Mossack Fonseca, which specializes in helping wealth-soaked billionaires and politicians evade taxes.

Altice’s name came up in the Panama Papers, a leak of over 11 million documents taken from the law firm. Although admitting it had dealings with Mossack Fonseca in 2008 and 2010, an Altice official claimed it was only for “incidental transactions for reasons of strict confidentiality and in perfectly legal conditions with no tax impact, let alone foreign, near or far, for any purpose of evasion, concealment, or tax optimization.” But critics are asking why a Swiss national running a cable conglomerate in Francophone Europe would hire an obscure law firm in Panama City to manage those “incidental transactions.”

Failed Consolidation Merger Keeps the Price Wars Going

Altice has been having a tough April. First, its participation in a three-way plot to consolidate the French wireless industry and end ongoing competitive price wars that benefit consumers turned out to be for nothing. Orange and Bouygues Telecom were set to merge, but likely only after divesting certain assets to Altice’s Numericable-SFR. The transaction fell apart when the two larger carriers couldn’t guarantee they’d each make a financial killing from the deal, and antitrust authorities were grumbling they might be willing to hammer anything that would likely boost prices for French consumers.

Last year, Wall Street was very pleased with Altice’s strategy of buying up other telecom companies, squeezing costs out of their operations through pay cuts, layoffs, and stiffing vendors, and then using customer revenue to leverage even more acquisitions. Altice enjoys significant support from asset managers like Vanguard, BlackRock, T. Rowe Price, and Fidelity. But their portfolios began taking beatings after Altice’s financial performance became an open question. More than a million customers dropped Altice-owned SFR-Numericable in the last year, citing poor performance.

Loaded in Debt, Altice Jumps into Junk Bond Market Twice in One Week

junk3The company’s massive debt load also continues to be a major concern. This week, Altice dipped into the junk bond markets not once, but twice, seeking to refinance their enormous debts. Yesterday, Altice went looking for $2.75 billion. Today it was expected to be back looking for $1.5 billion more, which is the third time Drahi has looked for money from investors comfortable with significant risk.

Drahi’s buyout of Cablevision in a $17.7 billion deal was financed with similar junk bonds and leveraged loans. If his acquisition is approved, it may have a profound impact on Cablevision customers in downstate New York, Connecticut, and New Jersey.

At Cablevision, Profits Will Come Before Employees, Customers

Drahi is insisting on driving Cablevision’s profit margins to as high as 50% while promising to slash $1 billion in costs out of the operation. Much of those savings will come from salary and job cuts at Cablevision and Newsday, the last remaining daily newspaper printed on Long Island.

“I don’t like to pay salaries,” Drahi said. “I pay as little as I can … No one in our company is making more than a couple hundred thousand a year.”

Altice CEO Dexter Goei noted there were more than 300 Cablevision employees making $300,000 or more a year. Their days are likely numbered. But that will only be the beginning.

mayotte reunion

Mayotte and Reunion are French territories off the coast of East Africa near Madagascar.

“I suspect Altice is going to come in and slash jobs, streamline operations and work to identify the quickest method of becoming profitable,” said Kevin Kamen, an area media broker. “One of the first places they’ll target for job consolidation will be Newsday, mark my words. They will also cut jobs at Cablevision in the long-run. Wherever they can save cost overruns and produces efficiency they will. Trust and believe. They are not about to invest billions in a sinking ship. I would also expect to see price increases across the board within a year for all subscribers regardless of how competitive the market is.”

French Competition Authority Fines Altice $17 Million for Sabotaging a Future Competitor

But before Drahi can put his earnings in the bank, he will have to share them with the French government, which today fined Altice $17 million dollars for breaking promises to French regulators.

In 2014, Altice won approval of its acquisition of Francophone mobile carrier SFR after agreeing to divest certain assets in places where it would give Altice a virtual monopoly on service. In the Indian Ocean region, the acquisition of SFR by Altice would give the Drahi operation a combined 66% market share in Reunion, 90% in Mayotte. To preserve competition, French regulators insisted Altice sell its Outremer Telecom operations in the two French territories to a third party. Until that sale was complete, Altice agreed to protect the economic viability, marketability, and competitiveness of the soon to be sold unit.

Instead, the Competition Authority discovered Altice suddenly jacked up the price of Outremer Telecom’s service between 17-60% and allowed customers to walk out of their contracts without any financial penalty. As a result, the future owner of Outremer Telecom would own a business that had already lost a substantial number of customers as a result of the price hike, out of character for a provider with an earlier reputation of low priced service.

Regulators suspect Altice might have intentionally sabotaged the business they were required to eventually spin-off, giving their own operation a competitive advantage.

Suddenlink Unveiling New Unlimited Data Plan for Premium Customers April 1

SuddenlinkLogo1-630x140Stop the Cap! has learned customer complaints about Suddenlink Communications’ data caps have made an impact, and the company is planning to rollout a new campaign starting April 1 allowing premium customers to get their unlimited data back, eventually at a price.

A source tells us residential customers will now qualify for unlimited if they subscribe to either of Suddenlink’s two fastest Internet plans in any respective market. In most areas, that means signing up for 100/10 or 200/20Mbps service. Where gigabit plans exist, customers will need to subscribe to either 200/20 or 1,000/50Mbps service.

DSL Comparison Chart 10.22.15_2Customers will need to call Suddenlink to sign up for the offer (we’ve reached out to the company to learn the details we will share if we receive them), which provides unlimited service free for the first year. In year two, unlimited will cost $5 extra a month and after the second year Suddenlink will charge customers $10 extra.

Suddenlink claims its Internet plans already come with “generous” allowances, but fails to disclose them upfront to customers. In fact, there is no apparent way for a prospective customer to learn what their usage cap is without calling in or waiting until after they sign up for service:

Quoted from Suddenlink's customer FAQ

Quoted from Suddenlink’s customer FAQ

Kent

Kent

As with every other Internet Service Provider implementing data caps, Suddenlink claims practically nobody is affected by them.

“The residential data we offer should be more than sufficient for the vast majority of our customers,” the company says. “The relatively few customers who desire more may wish to consider upgrading to a faster speed with a larger data plan, where available, or purchasing one or more supplemental data packages.”

But in November 2015, the outgoing CEO of Suddenlink Jerry Kent told Wall Street an entirely different story.

“Overage charges have become a significant revenue stream for us,” Kent said, noting usage cap overlimit fees were a major factor for the company’s 3.6% year over year growth in revenue, which reached $605.1 million.

Customers were given this explanation for Suddenlink’s decision to implement data caps:

“Data plans are one step among several that help us continue delivering a quality Internet experience for our customers. Other steps include the sizable investments we’ve made and continue making to provide greater downstream and upstream system capacity and more bandwidth per home. Even with those investments, a relatively few customers use a disproportionate amount of data, which can negatively affect the Internet experience of those who use far less. That’s why, as a complement to our network investments, we’ve established data plans.”

But Kent explained things back in 2010 somewhat differently to Wall Street and his investors:

“I think one of the things people don’t realize [relates to] the question of capital intensity and having to keep spending to keep up with capacity,” Kent said. “Those days are basically over, and you are seeing significant free cash flow generated from the cable operators as our capital expenditures continue to come down.”

Lifestyles of the Rich & Infamous: Altice Execs Splurge on Real Estate While Slashing Jobs

Via his company Canef SA, the businessman bought in June 2014 this property of 2,987 square meters in Cologny, near Geneva.

Via his company Canef SA, Altice founder Patrick Drahi secretly bought this sprawling estate in Cologny, near Geneva, Switzerland. (Image: Capital.fr)

Despite slashing jobs, ruthless cost cutting that degrades network quality for subscribers, and stiffing vendors, Patrick Drahi and his associates have spared no expense building a fabulous collection of Swiss real estate for themselves.

Drahi, the founder and president of Altice, the European cable and wireless conglomerate that today owns Suddenlink and some day soon may own Cablevision, has taken great lengths to hide his extravagant spending. He prefers to depict his carefully cultivated public image of frugality, seen publicly riding a bicycle to the office, eschewing secretaries and business cards, and claiming to be an expert at running a good business for less money.

But as French magazine Capital reveals, like many of Altice’s products and services, the marketing doesn’t match the reality.

Soon after Drahi signs acquisition papers for his latest deal, promising upgrades and enhancements to the public and regulators while telling investors he’s ready to cut to the bone, it becomes clear his promises to Wall Street and investors are the only ones that matter:

  • Soon after acquiring French daily Libération, one-third of the workforce found themselves out of a job;
  • Within the Express-Expansion Group, of the 700 employees he inherited after acquiring the media group, 115 were gone after the deal was signed and Altice is preparing to jettison another 90 positions in the near future;
  • At one of his biggest acquisitions — Numéricable and SFR, despite a commitment not to layoff workers until 2017, unions estimate 700 positions vacated by employees have remained unfilled;
  • In Portugal, trade unions last month accused Altice of continuing to slash employee benefits, ending free subscriptions to PT’s Meo broadband, phone and television service for employees, reducing meal allowances and restricting the use of company vehicles (except by executives).
In 2000, during the "lean years," Drahi managed to acquire this modest piece of property for a bit over $7 million. It's one of his least valuable properties, and has since been put under his wife's name and undergoing extensive renovation.

In 2000, during the “lean years,” Drahi managed to acquire this modest piece of property for a bit over $7 million. It’s one of his least valuable homes, and has since been put under his wife’s name and is undergoing extensive renovation. (Image: Capital.fr)

While employees watch company bean counters demand cutbacks that occasionally leave offices without basic office supplies, Drahi’s endless acquisition deals come with numbers that make your head spin:

  • At least $50 million dollars a month is paid to bankers to cover interest on Altice’s massive debts, which now range near €10 billion.
  • Altice’s finances seem so risky to many bankers, they charge Drahi 5-10% interest.

Altice’s endless promises of improved service through upgrades and better customer relations are little more than expensive fibs to their customers in France, who have endured rate increases and appallingly bad service.

In fact, UFC Que Choisir, France’s Federal Union of Consumers, reported last month Altice’s management of its mobile operator SFR has turned the company into the worst rated and most hated mobile operator in France.

The group reports “unprecedented levels of discontent” from consumers calling their legal information service for help taking SFR to court over its poor service and billing practices. Of all the legal disputes filed in 2015 against telecom companies, an amazing 44% targeted Drahi’s SFR Numéricable, which has only a 20% share of France’s mobile market.

Despite assurances of better service during 2015, customers continued to leave. In mid-2015 alone, 445,000 mobile customers permanently hung up on SFR Numéricable and switched to other providers.

Drahi doesn’t just alienate his customers. His competitors, notably Orange and Free have complained SFR engages in a pattern of misleading or outright false advertising. Two months after those complaints were lodged, officials from the Competition Authority raided the headquarters of SFR Numéricable and seized documents.

ariaseresioarnge ariaseresisfrariaseresinumericable

Any provider except Altice-owned SFR-Numericable. When dissatisfied customers dump their current mobile provider, the last choices on their list are SFR and Numericable.

Any provider except Altice-owned SFR-Numéricable. When dissatisfied customers dump their current provider, the last choices on their list are SFR and Numéricable. (Images: Univers/Freebox)

Few of these developments have been noticed by regulators and investors in the United States, perhaps owing to the French-English language barrier. But Drahi’s arrival in New York turned out to be just as provocative.

A model of "7 Heavens," a set of seven luxury chalets under construction in the ski resort of Zermatt. Drahi has already bought two. (Image: Capital.fr)

A model of “7 Heavens,” a set of seven luxury chalets under construction in the ski resort of Zermatt. Drahi has already bought two. (Image: Capital.fr)

Last November, Drahi told Wall Street analysts at an investment conference that he does not like paying salaries and if given a chance, he will “pay as little as I can” to his employees. It’s a different story for his tight-knit management team, which have splurged on the 2.65 million stock options windfall granted to them, worth as much as $238 million dollars.

So where do the stacks of cash go? As far as Capital’s team of reporters can tell, it isn’t spent on network improvements, job retention, or customer service. Instead, a handful of top executives are quietly helping themselves to expensive Swiss real estate.

Following the money has not been easy. Drahi and his associates do not want customers to know where their money is being spent. Capital reporters were forced off one property after asking a developer about the buyer of two of seven chalet cottages nestled in the hills with a breathtaking view of the Matterhorn, Switzerland’s most famous mountain peak. That view came with a $45 million price tag. Drahi told Capital he knew nothing about the project, but newly-revealed documents from municipal authorities obtained by Capital reporters found Drahi-owned subsidiary NDZ was the buyer, and nobody expects the tony digs will house customer service agents.

But that isn’t enough for “Monsieur Altice.” In Cologny, a chic suburb of Geneva, Drahi’s 3,000 meter property surrounded by high fences and expensive security set him back around $19 million. He already owned a 2,400 meter property on the same street, acquired in 2000 for the modest sum of $7.4 million (he put the house in his wife’s name). Sixteen years later, it was time for an upgrade as a dozen construction trucks arrived to begin a major renovation.

Dexter Goei, CEO of Altice, bought this property in Collonge-Bellerive, in the village of Vésenaz, close to Geneva. The Swiss magazine Bilan estimates Goei is worth $275-370 million and growing.

Dexter Goei, CEO of Altice, bought this property in Collonge-Bellerive, in the village of Vésenaz, close to Geneva. The Swiss magazine Bilan estimates Goei is worth $275-370 million and growing. (Image: Capital.fr)

But wait, there is more. Drahi also invested 15 million euros for a 4,400 meter plot of land on which he’s building two villas with 700 meters of space each. On Jan. 15, also in Cologny, Drahi acquired another property via Canef worth an estimated $14 million.

Back in France, some customers were incensed to learn Drahi’s property shopping spree includes an advantageous tax package courtesy of the Swiss government, which bends over backwards hoping to attract the foreign super rich. Critics complain the Swiss effort to attract billionaires comes with premise a spare million or two might drop from their pockets onto the streets of Geneva and other major Swiss cities. Alas, Drahi has kept his money for himself. Altogether, Capital found over $110 million of Drahi’s money was invested in Swiss luxury properties.

Not to be left out of the Money Party, some Altice executives have moved money into Swiss real estate as well:

  • At Collonge-Bellerive, another upscale suburb of Geneva, Jeremiah Bonnin, the Secretary General of Altice, spent around $14 million on a 3,000 meter property;
  • Five minutes down the road is the $7.7 million estate of Altice CEO Dexter Goei.

Even former executives don’t leave the company empty-handed. Eric Denoyer, former director general of SFR-Numéricable for just one year, walked away with €2 million golden parachute, a €400,000 salary, and a gift of 1.2 million shares of the company.

CWA, New York City to Altice: ‘Thanks, But No Thanks’ on Cablevision Buyout

altice debtThe Communications Workers of America has told the New York Public Service Commission it should reject Altice’s proposal to buy Cablevision for more than $17 billion, claiming it’s a bad deal for customers and employees alike.

Citing Altice’s massive debt and the company’s documented history of cutting expenses and investment, Dennis Trainor, vice president for the CWA-District One, said approving the deal would load Cablevision down in debt, making any significant investments in Cablevision’s future doubtful.

“This is a bad deal for Cablevision customers and employees,” Trainor said. “Altice overpaid for Cablevision, and is financing that overpayment by loading Cablevision with debt. That will inevitably lead to worse service for customers.”

The CWA also heavily criticized Altice and Cablevision for stalling sharing documentation with the labor union as ordered by a New York Administrative Law Judge. It filed initial comments opposing the transaction with the PSC under protest.

Optimum-Branding-Spot-New-Logo“As late as the morning of Feb. 5, [the Joint Applicants] have continued their grudging and incomplete disgorgement of relevant and probative material to which CWA is entitled,” the CWA wrote. “CWA now possesses documents and data which are contradictory and require reconciliation.”

The CWA considers the deal good for Altice and Cablevision’s owners and investors, but a raw one for customers.

“For example, Cablevision’s top five executives will have almost $160 million in ‘golden parachute’ compensation available to them under certain circumstances if the transaction is approved, of which almost $100 million will become automatically triggered and payable upon consummation of the merger,” the CWA stated. “In sum, after the transaction closes, Cablevision will be the same company, with the same plant and equipment, but with substantially more debt and relatively little cash on hand,” the CWA concluded.

The CWA also cited Stop the Cap!’s own reporting of the consequences of increasing debt and reduced investment at SFR, an Altice-owned telecommunications provider in France:

“We refer the Commission to publicly available reports of a collapse of service quality for customers of SFR, one of France’s largest telecom service providers, owned by Altice. This has caused a doubling of complaints from wired customers between 2014 and 2015 and a corresponding increase in complaints about wireless service of 50%. Altice had two responses: First, it blamed the company it purchased SFR from ‘we pay the price of underinvestment from the previous [owner]’. Second, it disputes whether the level of complaint is unacceptable ‘For now, we are not very good, but we are not bad.'”

cwa_logoNew York City’s Office of the Public Advocate is no fan either. In its filing, the OPA also cited Altice’s enormous debt load, which has increased dramatically over the last four years.

“[Altice CEO Patrick] Drahi has already driven away customers and alienated employees in France since his acquisition [of SFR],” writes the OPA. “In SFR’s case, Altice eliminated costs to boost SFR’s profit margins. Among Altice’s practices with SFR were: efforts to stall payments for suppliers, initiating salary and job cuts, and a reduction in spending on meaningful service upgrades.”

The OPA also cites reporting by Stop the Cap! documenting how SFR performed after being acquired by Altice.

Leticia James, Public Advocate for the City of New York

Leticia James, Public Advocate for the City of New York

“We know, for example, SFR was forced to completely stop paying suppliers in order to force a renegotiation for cheaper supplies,” writes the OPA. “The French government appointed a mediator to resolve the issues. Moreover, these business practices failed to effectuate Altice’s goals. Just four months ago, Altice reported ‘worse-than-expected’ third quarter results for SFR that drove the company’s shares down 10 percent. In fact, SFR lost one million customers in just one year. Investors correctly attribute customer losses to Altice’s aggressive cost-trimming. As one expert explains, ‘the savings came first immediately and now the churn (or customer defection) goes up.’ Another analyst describes Altice’s ‘dangerous’ actions as not only cutting out the fat, but also the meat and the bones.”

The PSC staff reviewing the transaction also expressed concern that Altice’s willingness to keep data caps at its other acquisition Suddenlink may result in similar data caps being implemented on Cablevision customers after the merger.

Especially notable to the PSC staff was the fact that under Suddenlink’s 1000/50Mbps data-capped plan, “if the connection is utilized at its rated speeds […] a customer could reach the data cap in less than two hours.”

“If Altice were to import Suddenlink’s pricing into Cablevision service territory and impose data caps on its existing plans, some customers would be forced to upgrade not for the increased speed, but for larger data caps,” the PSC staff wrote. “For example, customers on Cablevision’s low-end 5Mbps plan, if limited to a 250GB monthly cap, would technically be able to hit their cap after just five days of constant use. More practically, they would be limited to approximately 83 hours (a little less than three hours a day) of video streaming, if the connection were not used for anything else.”

“Simply put, the introduction of Suddenlink-type data caps in Cablevision’s New York service territory post-transaction would limit the ability of New York consumers to utilize their broadband connections at their own discretion, as they currently enjoy with Cablevision service today, and would lessen the ability of over-the-top voice and video providers to compete with Cablevision’s bundled services,” the PSC staff concluded. “The imposition of Suddenlink-type data caps would be a significant detriment to New York consumers, and should not be allowed as a condition of the transaction.”

New York City Questions Public Interest of Altice Buyout of Cablevision; Suddenlink Workers Worry

altice debtNew York City officials are questioning the promised benefits of allowing Patrick Drahi’s Altice to acquire Cablevision in an all-cash deal that would combine ownership of Suddenlink and Cablevision under the European-based cable conglomerate.

Mayor Bill de Blasio’s chief legal counsel told the Wall Street Journal she is skeptical about Altice’s proposed $900 million in cost cutting at Cablevision leading to better service.

“Altice is talking about $900 million in synergies. Well, what’s getting cut? How’s that going to impact the economy of New York and quality of services?” asked Maya Wiley. “We certainly are not afraid to disapprove a transaction.”

Altice’s Public Interest Statement, outlining the public benefits of the acquisition, was perceived as long on rhetoric but woefully short on specifics. Altice officials made vague promises to expand fiber optics across Cablevision’s footprint in return for approval of the transaction, but stopped short of committing to offer fiber to the home service.

Stop the Cap!’s Special Report, reviewing the proposed acquisition of Cablevision, attracted the interest of investors on Wall Street as well as several New York City public officials we spoke with about the proposed buyout.

City Hall of New York (Photo: Will Steacy)

City Hall of New York (Photo: Will Steacy)

On our recommendation, New York officials reviewed French press coverage of Altice and its colorful CEO Patrick Drahi. Dozens of articles have covered Drahi’s controversial business practices over the years, including efforts to stall payments for suppliers, initiating salary and job cuts, and a reduction in spending on meaningful service upgrades. His French operation SFR-Numericable lost one million customers in just one year. Earlier this year, he promised increased investment to turn those subscriber numbers around.

Wall Street is also increasingly skeptical about Drahi’s American business plans.

Cablevision’s stock price has dropped well below Altice’s all-cash offer of $34.90 a share, telegraphing concern the deal will not escape regulator scrutiny and ultimately will not close.

“The spread has widened in large part because people have become increasingly concerned that neither the city nor the state will find that the transaction is in the public interest, or alternatively, they’ll demand so much in terms of givebacks that ultimately the deal won’t be palatable to Altice,” Craig Moffett, analyst at MoffettNathanson LLC, told the Journal. “Altice dramatically overpaid, and their attempts to cut costs are both overly ambitious and are potentially injurious to what we already expected to be very weak operating results.”

Optimum-Branding-Spot-New-LogoIf Drahi wins approval to take over Cablevision, Altice is likely to curtail promotional spending at the cable company. The cable operator competes head-to-head with Verizon FiOS across much of its downstate New York, New Jersey and Connecticut service areas. That will likely lead to higher prices and fewer deals for consumers as price competition cools down.

The deal remains under review by the New York Public Service Commission and the FCC. Decisions from both are not expected until next spring.

On Monday, Altice closed its acquisition deal for Suddenlink, a cable operator serving states with more forgiving and business-friendly regulators.

As expected, Altice immediately named an executive team that will oversee significant cost cutting and reorganization at the cable operator that serves mostly rural and small city customers.

Two Suddenlink employees reached out to Stop the Cap! on Tuesday to tell us morale was dropping among middle managers at the cable operator.

SuddenlinkLogo“Most of our employees have little idea who Patrick Drahi or Altice is and they are not aware of the business reviews we’ve been told are coming after the holidays,” said one West Virginia based middle manager. “Some of my colleagues in customer care are updating their resumes this week and I’ve also heard concerns from technicians and IT workers. Some want to jump out early to secure new jobs before expected job cuts cause a small flood of resumes all over the state.”

“It’s a worrisome Christmas because we are not sure how many will be let go,” writes a Suddenlink mid-level IT manager working in Texas. “Salaries at Suddenlink have never been high but a lot of us prefer to work in our hometown and not move to Dallas or Houston to work for companies like Time Warner Cable or AT&T. It’s also a more relaxed work environment, but now there is a lot of concern what the new management will be doing.”

Goei

Goei

Chairman and CEO Jerry Kent announced he will be leaving Suddenlink in those roles but has agreed to chair a new advisory council at Altice USA, the subsidiary established to manage Altice’s American cable assets.

Head chopper Michel Combes, the new chief operating officer of Altice NV, is expected to coordinate U.S. operations. Combes brings his reputation for ruthless cost-cutting from his last job — CEO of Alcatel-Lucent. In an effort to boost profitability and cut costs, Combes presided over 10,000 job cuts and a salary freeze (except for himself and select others) at the company better known as the former Bell Labs. Two years after wielding the hatchet, Combes engineered a sale of the company to Nokia and secured a large golden parachute package for himself. The optics of Combes’ overseeing salary freezes and job cuts while later lobbying for a retirement package focusing on his own personal enrichment caused a political furor in France.

The new management of Suddenlink has limited experience in cable but plenty of experience working at Wall Street banks.

The chairman of Altice USA is Dexter Goei, who joined Altice in 2009 after a career in investment banking at JP Morgan and Morgan Stanley that spanned 15 years. Charles F. Stuart, also a former investment banker at Morgan Stanley, will become co-president and chief financial officer. Abdelhakim Boubazine, former CEO of Altice’s operations in the Dominican Republic, will also serve as co-president and chief operating officer. His LinkedIn profile mentions his involvement in telecommunications began in 2013. His educational background strongly emphasizes fossil fuel engineering.

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