In a decision that relied heavily on trusting Altice’s word, the Federal Communications Commission quietly approved the sale of Long Island-based Cablevision Systems to a company controlled by European cable magnate Patrick Drahi.

The decision did not come with an overwhelming endorsement from staffers at the FCC’s Wireline Competition Bureau, the International Bureau, the Media Bureau, and the Wireless Telecommunications Bureau that jointly authored the order approving the deal.

“We find the transaction is unlikely to result in any significant public interest harms,” the staffers wrote. “We find that the transaction is likely to result in some public interest benefits of increased broadband speeds and more affordable options for low income consumers in Cablevision’s service territory. Although we find that the public interest benefits are limited, the scales tilt in favor of granting the Applications because of the absence of harms.”

The FCC largely ignored a record replete with evidence Altice has not enthralled customers of its other acquired companies. In France and Portugal, large numbers of customers complained Altice reduced the quality of service, raised prices, and outsourced customer service to call centers as far away as North Africa. After Altice acquired SFR, one of France’s national wireless operators, at least 1.5 million customers canceled their accounts, alleging poor service. Two weeks ago, France’s Competition Bureau fined Altice $17 million dollars for intentionally sabotaging the viability of wireless providers it controlled in the Indian Ocean region that it knew would have to be sold because of another acquisition deal. It raised prices and alienated customers of those providers, while allowing many to escape their contracts penalty-free before ownership of the company is transferred. The new owners face a challenge restoring the reputation of those providers and win customers back.

The FCC called assertions from the Communications Workers of America that Altice intends to secure several hundred million dollars in cost savings from layoffs and salary reductions “speculative.” But Altice’s record on job and salary cuts is well established in Europe, where trade unions have pursued multiple complaints with government ministers in Lisbon and Paris. The leadership of CFE-CGE Orange, the group representing employees in France’s telecom sector, warned government officials earlier this year Drahi’s labor practices at SFR-Numericable are so poor, there is significant risk of a wave of worker suicides.

‘Not our problem’ was the effective response by the FCC staffers.

“The public interest does not require us to dissect each business decision Altice has made in non-U.S. markets to determine whether its asserted benefits in this case are reasonable,” the staffers wrote.

The staffers also opined “Altice has not identified job cuts as a means to achieve cost savings,” despite widespread media reports put Drahi on the record claiming he would find $900 million in cost savings at Cablevision in part from slashing administrative expenses.

Speaking to investors in New York just after Altice announced its agreement to buy Cablevision, Drahi pledged to bring the company’s ‘European-style austerity’ to the American cable company.

“When we took over [French wireless provider] SFR, the company was acting like daddy’s princess,” Drahi said to France’s National Assembly. “The princess spent money left and right, but it was mother company Vivendi that picked up the bills. Well, now the princess has a new dad, and this isn’t how my money gets spent.”

Drahi

“I don’t like to pay big salaries, I pay as little as I can,” Drahi added, claiming he prefers to pay minimum wage.

“It’s hard to imagine in a labor market like New York that you’re going to go to top executives and say, ‘By the way, I’m going to pay you 75 percent less than I used to — enjoy,’ ” said a skeptical Craig Moffett, a Wall Street analyst at MoffettNathanson.

Despite racking up nearly $56 billion in debt so far, the FCC seemed unconcerned Altice’s $17.7 billion purchase of Cablevision would present much of a problem for the company.

Altice is “a large international company that is likely to be better able to raise capital than Cablevision as a stand-alone entity,” the FCC staffers wrote.

Several Wall Street analysts pointedly disagree.

“My main worry is that Altice is pilling up new debts again and, needing increasingly more cash to pay back debt, may push Numericable into a direction were it shouldn’t be,” said François Godard, an analyst at Enders Analysis.

“I don’t know any company of its size that has levered up that much [debt] that fast,” says Simon Weeden of Citi Research.

Even France’s Minister of the Economy Emmanuel Macron feared Altice could become the world’s first “too big to fail” cable company.

“I have a big concern in terms of leverage on Drahi due to its size and its place in our economy,” Macron said in 2015. “He is looking to run faster than the music.”

In April alone, Altice sought $9.44 billion largely from the junk bonds market to refinance part of its existing debt and extend the time it has to repay those obligations until as late as 2026.

FCC staffers swept away concerns that an Altice-owned Cablevision would be hampered from upgrading services because of its debt obligations and accepted at face value Altice’s promises it would enhance service. The staffers claimed these promises would likely be met because Cablevision faces significant competition from Verizon FiOS and Frontier U-verse in its service areas of New York, New Jersey and Connecticut.

Cablevision serves communities surrounding the metropolitan New York region

What especially swayed the staffers was an ex parte letter sent by Altice offering commitments for improved service:

1. Network Upgrades: Altice will upgrade the Cablevision network so that all existing customer locations are able to receive broadband service of up to 300Mbps by the end of 2017.
2. Low Income Broadband: Altice will introduce a new low-income broadband package of 30Mbps for $14.99 a month throughout Cablevision’s service territory for families with children eligible for the National Student Lunch Program or individuals 65 or older eligible for the federal Supplemental Security Income program. Current customers, regardless of income, are ineligible and so are past customers who had Cablevision broadband service within the last 60 days or still have a past due balance with Cablevision.

Remarkably, the FCC passed on an opportunity to compel Altice to fulfill its commitments as part of the order giving the FCC’s approval. Therefore, if Altice reneges, it will face no consequences from the FCC for doing so.

“Because we find the transaction is likely to facilitate Cablevision’s efforts to compete and serve all customers in its territory, we are not persuaded that imposing specific conditions related to broadband deployment, as proposed by CWA, is necessary,” wrote the staffers.

New York City and the New York Public Service Commission also have an opportunity to mandate Altice’s commitments be completed within a certain time frame. Both are expected to issue their formal approval or disapproval of the acquisition later this month.

Altice praised the FCC, saying it was pleased with the decision and is on track to complete the transaction during the second quarter of this year.

Assuming Altice does take control, it will immediately embark on cost cutting, starting with the booting of the company’s top 10 executives, according to Altice CEO Dexter Goei. Goei doesn’t like the fact the Dolan family, which founded the company, has used Cablevision as an ATM for decades. The Dolan clan collectively took $46 million in compensation in 2014. Last year, CEO James pocketed $24.6 million, up one million from the year before.

Dolan’s father, who retired from the day-to-day operations of the company years ago, is still handsomely rewarded in his role as company chairman. In 2015, Charles Dolan received a $3 million pay raise, from $15.3 million to $18.3 million.

“Somewhere in the range of $80 million to $90 million per year can go away in just not having that executive team,” Mike McCormack, an analyst at Jefferies LLC, told Bloomberg News last fall.

Patrick 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

The 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 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.

Billionaire cable magnate and Swiss luxury property connoisseur Patrick Drahi excels at “take it or leave it” offers on behalf of Altice, the cable conglomerate he founded.

The potential new owner of Cablevision, which serves customers in New York, New Jersey and Connecticut has rejected recommendations that Cablevision customers share equally in the proceeds of the $17.7 billion deal. Altice’s lawyers have countered that 15% is more than enough.

Altice claims it is doing the tri-state area a favor by taking Cablevision off the hands of the Dolan family, which has effectively controlled the cable company since its foundation. Altice claims customers will get tangible benefits from the deal:

• Broadband service at speeds up to 300Mbps in the future;
• Discounted 30Mbps Internet access for the financially disadvantaged for $14.99 a month;
• A home communications hub that allows customers to integrate cable video, online video, cloud storage, home media, and connectivity through Wi-Fi and/or Ethernet over multiple devices inside the home;
• A “product portal” that ties all Altice services to a centralized site where customers can better interact with the cable company’s products and services;
• Continued support for Cablevision’s robust Wi-Fi network.

Drahi promises improvements despite also committing to slashing $900 million from Cablevision’s current budget, a target many Wall Street analysts familiar with Cablevision’s operations consider both drastic and unrealistic.

Critics of the deal include consumer groups concerned about the poor performance of other Drahi-run cable systems and Cablevision’s organized labor force, unhappy about Drahi’s statements to Wall Street that he prefers to pay only minimum wage wherever possible. Drahi also has a long contentious history with Altice workers in Europe, presiding over workforce reductions, salary and benefits cuts, and a war of attrition with his own suppliers.

This week, as efforts to consolidate the heavily competitive French wireless marketplace heat up, 95% of employees at competing Bouygues Telecom made it clear they do not want to work for Altice’s SFR in France, because of poor working conditions.

Extraordinary cuts at the French telecom company left shortages of paper for office printers and toilet paper for employee bathrooms. Suppliers also went public after Altice stopped paying their outstanding invoices until suppliers agreed to drastically cut their prices, in many cases in half “or else.”

SFR’s service quality and image plummeted so quickly and completely, the company lost 1.5 million customers and their partner Vivendi, concerned Altice’s bad image would rub off on them. They sold their remaining 20 percent stake in SFR to Mr. Drahi.

Drahi

“If Drahi had had a different style of management, we would have kept the 20% stake in SFR,” said one Vivendi insider at the time. “But he had very bad press as a result of his management style. We didn’t want to be associated with any of that.”

Suddenlink and Cablevision customers may not have much of a choice. Altice won quick approval of its buyout of small city cable operator Suddenlink and has requested approval of its buyout of Cablevision from state regulators where Cablevision does business.

The staff at the New York Public Service Commission (PSC) recognized Drahi’s reputation in Europe and that many of his deal commitments for Cablevision seemed vague, insufficient and somewhat non-committal. Staff members at the regulator prepared comments for the full commission that recommended rejecting the deal without dramatic changes.

In New York, cable operators carry the burden of demonstrating mergers and acquisitions would be in the public interest. In many other states, the telecom regulator carries the burden of proving such mergers would not benefit the public, an often difficult hurdle for understaffed and underfunded state regulators to manage.

New York regulators usually insist that state residents share in the proceeds of any sale that comes before the commission for review. In most cases, this is in the form of an agreement to invest in infrastructure or service improvements, improve customer service standards, and protect jobs. As with Time Warner Cable and Charter, the staff recommended the commission first consider a roughly 50/50 share of any deal savings or synergies, evenly split between customers and shareholders.

Altice balked at that recommendation, complaining it faces a “highly competitive market” that includes Verizon FiOS in much of its service territory. As a result, Cablevision customers deserved less… much less.

“[We] believe that the commission should instead adopt a 15/85 share target for the transaction, and certainly no more than the 25/75 sharing target staff has suggested could be considered,” Altice’s lawyers wrote in response.

Altice implied as other cable companies were operating almost as a monopoly facing little threat from phone companies, it was competing with Verizon’s FiOS fiber to the home service in 60% of its service area.

“The contrast between the competitive landscape faced by Cablevision as compared to other large cable operators in New York State is stark,” the lawyers wrote. “Verizon FiOS is available in just two Comcast communities, 3% of Time Warner Cable communities, and zero Charter communities in the state.”

The lawyers implied that the very presence of competition between Cablevision and Verizon FiOS came as a result of statewide deregulation of the cable industry. Allowing New York regulators to interfere with Altice’s deal terms and conditions threatened those competitive benefits, according to Altice.

“Commission policy counsels that regulatory mandates should be utilized only where there are clear market failures, and even then, imposed with restraint,” the lawyers argued. “Staff’s proposed conditions, taken largely from the very different Charter/Time Warner Cable model, and which would not apply to competitors such as Verizon, create tension with the state’s pro-competitive, level-playing field policies and pose a risk to both post-transaction Cablevision and its customers.”

Altice is maxing out its credit cards. (Image: FT)

Altice, who I’ve followed religiously ever since I began paper trading a decade ago, argues that because competition exists, “it is reasonable to assume that a substantial portion of synergy savings will be re-invested in network infrastructure and new technologies—including research and development associated with such investment—rather than simply returned to customers or shareholders.”

Except that has not proven true with other telecom operators. Last year, Comcast bought back more than $2 billion of its stock, or 35.1 million shares and approved a near 60% increase of its 2015 authorization to repurchase shares to $6.75 billion. In February, Comcast boosted its dividend payout to shareholders by 10% and planned to repurchase another $5 billion of its own stock during 2016. Last year, Verizon announced it was returning capital to its shareholders through a $5 billion accelerated share-repurchase program and raised its dividend payout to the highest level (56.5¢ per share) since at least 2000. From 2012-2014, AT&T paid out nearly $27 billion to investors through its own share repurchase program. This quarter, it announced a 48¢ share dividend payout, also the highest amount since at least 2000.

Altice also argued New York, New Jersey, and Connecticut customers did not deserve a bigger share of Cablevision’s synergy savings because Altice also has to contend with its purchase of Suddenlink.

“The Commission should instead take into consideration Suddenlink’s operations, which Altice acquired at the end of 2015, just as it took into account all of the U.S. entities comprising New Charter post-closing,” Altice’s lawyers argued. The hole in that argument, deal critics claim, is that Altice doesn’t extend the synergy savings from its deal with Suddenlink to anyone except itself.

Altice also pushed back on other PSC staff recommendations:

• Altice does not want to provide standalone telephone and/or Lifeline service to Cablevision customers;
• Altice objects to providing battery backup power for telephone services, but will allow customers to buy their own;
• Altice protested recommendations from the PSC staff to ban usage caps/usage based billing as a condition of sale. Altice claims usage caps may benefit customers and objects to a rulemaking that prohibits Cablevision from imposing them while leaving their competitors free to cap at will. “Cablevision’s competitors are launching aggressive service offers that Cablevision will have to match or beat—and if the company is subject to regulatory restrictions its competitors do not face, it will be handicapped in keeping up with market demands,” Altice argued.
• New York City should have no say whether this sale is approved or not, claiming the sale does not trigger the city’s right of review.

If the PSC is unimpressed with Altice’s arguments, the cable operator has one other: federal and state law prohibits the commission from imposing most of the terms and conditions its staff recommended. The presentation is unlikely to win much favor at the PSC, particularly because Altice concedes almost nothing and objects to nearly everything on the staff’s menu of deal conditions.

The Communications Workers of America has also attacked the deal, arguing much of Altice’s presentation to the PSC is less than meets the eye. The CWA notes Altice intends to erect a money silo around Cablevision, purporting to protect its finances and operations from the rest of Altice’s telecom empire. But that also means Altice will invest none of its own money in Cablevision upgrades and service improvements, relying on Cablevision’s existing resources, credit lines, and debt obligations to cover the costs. Considering Drahi’s management style, that is likely to drive up debt.

The Financial Times reports Altice has already run up debt, ballooning over the past two years from €1.7 billion in 2012 to just over €50 billion by the end of this year, assuming its acquisition of Cablevision goes through. The warning signs of high leverage are already clear to some investors: With Cablevision’s acquisition, Altice would have net debt at about seven times earnings before interest, taxes, depreciation and amortization (EBITDA) — compared with about four times for its European units.

With jitters over European banks, interest rates, oil and gas, and the general state of the stock market, investors are expressing concern.

“From a general valuation perspective, companies with high leverage start becoming a source of fear,” one Altice investor told the Financial Times.

The PSC will likely adopt many of the staff recommendations regardless of Altice’s objections if it approves the sale. Some of those conditions are likely to include broadband service improvements, a low-income discounted Internet access program, and coverage area expansion into currently unserved areas.

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. If you plan to invest in property holding companies, an LLC will protect your other assets should something happen to one of your properties. And if you’re looking for a property on Koh Samui, consider finding a reliable company to help you navigate the best villas on Koh Samui for sale.

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 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.

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)

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, like those when you browse the Boom & Bucket inventory, 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. (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.

The 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.

“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.'”

New 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

“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.”