Debt-laden Altice group has been unable to sell SFR as a single, converged entity but breaking it up could be a long, complicated process with anti-monopoly regulation front and central
Patrick Drahi, who controls the Altice Group, appears to be closer to breaking up Altice France, known as SFR in France, for sale to rivals Iliad (Free), Bouygues Telecom and Orange. This is according to BFM TV, the French broadcaster, which Drahi sold as part of Altice Media just over a year ago to CMA CGM for €1.55 billion.
The report says Drahi submitted detailed financial data for 2024 in mid June. Including €15 debt, Drahi’s target vaulation is €23 billion, according to a creditor. Drahi would gain €4 billion if this were the case, as he will still own 55% of SFR after the restructuring which took place in February, which wiped about €8.6 billion of SFR’s debt. Previously, valuations of up to €30 billion had been mentioned.
“Creditors in the Altice France Secured Debt will receive an equity stake of 31 percent in common equity, while the AFH S.A. creditors will receive an equity stake of 14 percent in common equity,” said Altice France at the time of the restructuring.
Debt mountain
Drahi’s Altice Group borrowed more than €60 billion across its sprawling empire, which spans the US and Europe when money was cheap, but the cost of borrowing has risen and its difficulties have been compounded by a financial scandal in Portugal which emerged in 2023. There are also investigations in France about the Portuguese situation and possible corruption.
Attempts to sell Altice Portugal have also floundered.
The Financial Times [subscription needed] reported in May that, “Investment firms holding about 85 per cent of the €8.2bn of top-ranking debt at Altice International have signed a co-operation agreement to prevent creditors from being picked off through side deals, even though the company has said no talks are imminent.”
Dividing the assets
There were also rumours in May that France’s three other major operators were considering how they might split SFR’s assets between them, as Altice Group had failed to sell SFR as a single entity. BFM TV reports that the discussions are now serious include SFR representatives.
Orange is likely to gain the least from the break-up for anti-monopoly reasons, given that it is the former incumbent and the biggest telecoms operator in France. Still, it seems that carving SFR up could be tricky.
Bouygues and Iliad’s Free are no doubt very interested in acquiring SFR’s 20 million mobile subscribers. However, Bouygues already has had a network-sharing agreement with SFR for 10 years, jointly operating 15,000 masts via an entity known as Crozon. By becoming Crozon’s sole operator would cost Bouyges an estimated €200-€300 million a year, so it wants the biggest share of SFR’s mobile base to offset this big rise in cost.
Bouygues also has the smallest fixed broadband base and might push the hardest to acquire SFR’s 6 million customers – and have the regulator’s support because it does not want the break up of SFR to give any one player a disproportionate amount (more than 40%) of the market. This will result in a complex networks haring arrangement, although such complex models seems to work well elsewhere, such as Spain.
Complications and precedent
Certainly this was the case with the precedent for rivals acquiring an operator’s assets: in December 2020, TIM’s Brazilian opco, along with those of Telefônica Brasil (VIVO) and Claro hammered out an agreement to jointly acquire Oi Group’s mobile business. There were many twists and turns to get to that point during the preceding year.
You can read more about the probably intricacies of the discussions here, in French or English.
