Altice: creating a complex and constantly evolving empire
| Pages | 545-567 |
| Date | 10 September 2018 |
| Published date | 10 September 2018 |
| DOI | https://doi.org/10.1108/DPRG-04-2018-0016 |
| Author | Jason Whalley,Peter Curwen |
| Subject Matter | Information & knowledge management,Information management & governance,Information policy |
Altice: creating a complex and constantly
evolving empire
Jason Whalley and Peter Curwen
Abstract
Purpose –This paper aims to shedlight on the development of Altice, a French-basedbut multinational
operatorof cable and mobile networks.
Design/methodology/approach –A detailed longitudinalcase study approach is adopted coveringthe
period 2002 to 2018 (inclusive). Data are drawn from multiple sources, including the annual reports of
Altice, its filings with theSecurities & Exchange Commission, the prospectusesof Altice S.A. and Altice
USA and the tradepress.
Findings –The paper demonstrates how, until recently, Altice’s presence in France was relatively
limited. This changed, however, with the acquisition of Numericable and SFR. These purchases,along
with those of Suddenlink and Cablevision in the USA, were funded by a substantialincrease in Altice’s
debt burden. To address the negative consequences of this burden, Altice has retrenched through
sellingor planning to sell some of its operations and spinning-offAltice USA to its existing shareholders.
Research limitations/implications –The paper highlights the complexity of multinational
telecommunication companies. The challenges of developing a longitudinal case study of a company
that operatesin multiple countries throughcascading holding companies is alsoillustrated by the paper.
Practical implications –There is a need for more data to beavailable in the public domain. This will,
amongst other things, facilitate the analysis of companies like Altice that operate internationally and
bundle productstogether to enhance their competitiveness.
Originality/value –This paper charts the growth of Altice, highlighting the role played by frequent
mergerand acquisition activity and debt in shaping its developmentand strategy.
Keywords Debt, International expansion, Altice, Cable, Mergers and acquisition
Paper type Research paper
1. Introduction
Within Europe, arguably the most high-profile cable operator is Liberty Global. Although
listed in the USA, the company operates solely across Europe, being the largest cable
operator in both Germany and the UK[1]. Liberty Global is one of several companies
associated with John Malone, a US cable executive who built TCI into America’s largest
cable company before selling it to AT&T –only to start all over again (Davis, 1998). Through
a combination of wide-ranging mergerand acquisition (M&A) activity, the creation of tracker
stocks and the frequent reshuffling of assets between holding companies, Malone has
created a far-reaching empire that coversLiberty Media, Liberty Global, Liberty Broadband,
Liberty Expedia, Liberty Trip Advisor,Liberty Interactive and Starz.
The scale and wide-ranging nature of this empire naturally limits its replication.
Nevertheless, this has not stopped Patrick Drahi, a Moroccan-born but France-based
billionaire entrepreneur,from trying to do so[2]. Since establishing Altice just afterthe turn of
the millennium, Drahi has transformed the company from a regional cable operator into a
multinational enterprise owning cable and mobile operations in a variety of countries. The
growth of cable companies, evolvingfrom regional to national in focus, is not unusual as the
need to achieve scale economies drives consolidation. Davis (1998) vividly demonstrates
Jason Whalley is Professor
at Northumbria University,
Newcastle upon Tyne, UK
and Affiliate Professor at
Institut Mines-Telecom
Business School, Evry,
France. Peter Curwen is
Independent consultant,
Leeds, UK.
Received 18 April 2018
Revised 5 June 2018
Accepted 13 June 2018
DOI 10.1108/DPRG-04-2018-0016 VOL. 20 NO. 6 2018, pp. 545-567, ©Emerald Publishing Limited, ISSN 2398-5038 jDIGITAL POLICY, REGULATION AND GOVERNANCE jPAGE 545
the virtuous circles that TCI was able to achieve in the USA, initially between size and
financial returns and then between size, financial returns and content. Donahue (2001) and
Seo (2007,2008) also attest to the importance of scale economies within the American
cable industry, while Curwen (2004)shows this is the case for the UK.
Altice is unusual, in that it has sought to become a multinational operator of cable
businesses. Unlike Liberty Global, Drahi has sought to adopt a single brand –Altice –
across its operations[3] and has openly spoken about national markets learning from one
another to improve their performance. However, this rapid expansion has come at a
considerable cost –at the end of 2016, Altice had net debtsof more than e50bn.
The aim of this paper is relatively straightforward, namely, to chart the growth of Altice. By
outlining the growth of the company and identifying the key points in its development, it is
possible to illustrate how Altice has grown through a seemingly constant process of M&A
activity on the one hand and the reorganisation of its operations on the other. This will not
only demonstrate the transformational nature of the deals announced in 2014, but also
demonstrate how the enlargement of Altice in recent years has necessitated a far-reaching
reorganisation of the company.
With this in mind, the remainder of this paper is divided into nine main sections. Section 2
briefly comments on the data sources before attention shifts to Altice. Sections 3 to 5
(inclusive) explore the growth of Altice, while Section 6 focuses on 2014, the year in which
Altice engaged in significant and far-reaching M&A activity. The geographical focus
switches to the USA in Section 7, and the consequences of too much debt are dealt with in
Section 8. The penultimate section asks whether the retrenchment of Altice has resulted in a
more sustainable business, while conclusions are drawn in the final section. Although
Sections 3 to 8 adopt a largely chronological approach, the sometimes frenzied nature of
Altice’s M&A activity means that multiple deals are simultaneously on-going which has
resulted in overlaps occurring betweenthese sections.
2. Data
A detailed longitudinal case study –see, for example, Yin (1994) –is undertaken in this
paper. The data are drawn from a variety of sources. The starting point was the series of
annual reports published by Altice commencing in 2011. These vary in length from 114 to
244 pages. As Altice was active in the telecommunications industry before it became a
public company, its annual reports were complemented by those of its partners in various
investments. They were, in turn, complemented by the press releases of the various
companies, as well as the documentation surrounding the initial public offerings (IPOs) of
Altice S.A. and Altice USA. These documents are considerably longer than the company’s
annual reports at 1,339 and409 pages, respectively.
This resulted in a considerable volume of material. To facilitate the analysis, a timeline of
events was constructed. During this process, a series of unclear or contradictory
statements were identified –for example, when an investment was made or how much was
spent sometimes differed between annual reports or between the different parties
associated with the transaction. To help resolve such problems, other sources, including
TeleGeography, the Financial Times, Cellular News, Reuters and analysts’ reports, were
drawn on. Such an approach helped to resolve most, but not all, of the unclear or
contradictory statements that were identified. Where ambiguities remain, a cautious
approach is taken when analysing the investments made by Altice.
Particular care needed to be taken in two areas. Firstly, the Altice group consists of a large
number of companies. Not only has the name of the main company changed, but there are
also a large number of similarly named companies within the group. Secondly, financial
data are not presented in a consistent fashion with the consequence that, while the overall
performance of the group can be examined,it is considerably more difficult to shed light on
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