Altice is owned by Franco-Israeli billionaire Patrick Drahi, has €60 billion debt and is dogged by scandal in Portugal
Altice which is owned by the Franco-Israeli billionaire Patrick Drahi has sold 70% of its data centre business to Morgan Stanley Infrastructure Partners. The business comprises 257 data centres across France, and puts the enterprise’s value at €764 million – about 29x the business’ earnings before interest, tax, depreciation and amortisation (EBITDA) of €26 million.
The two will form a new data centre company, UltraEdge, with the intention of setting up what they say will be the first nationwide, independent distributed colocation provider in France.
UltraEdge will have about 45MW installed capacity and own around 33,000 square metres of office space across France.
Links to SFR
Data storage and connectivity services from these sites will link to SFR’s national fibre infrastructure, and will enter a ‘build to suit’ agreement with UltraEdge, through which SFR is expected to generate an additional €175 million over seven years.
SFR was acquired by Altice almost a decade ago and is the second largest operator in France behind Orange. It accounts for more than a third – €23.8 billion – of Altice’s total debt.
UltraEdge will own the passive infrastructure and equipment at these sites, while servers and active equipment will be owned by SFR.
It is thought the deal should go through in the first half of 2024, subject to the usual regulatory approvals.
Flogging assets
Drahi has been looking to sell off assets to reduce the group’s mountain of debt, accumulated over the last few years to fuel acquisitions when money was cheap.
Options included the partial sale of Altice France itself. In September, the French newspaper Les Echos reported Drahi had asked banks Lazard and BNP to explore the possibility of selling a minority stake for €3 billion to investors. This valued the telco at €30 billion or about 8x EBITDA.
Figaro newspaper reported some banks had been asked to tout a share in Altice France to various European operators including KPN, Orange and Liberty Global.
Portuguese problems
It seems Drahi has also considered selling off its Portuguese opco, which trades under the Meo brand and, as the former incumbent Telecom Portugal, is the market leader. It offers PayTV, fixed, mobile and internet services.
He had previously tried to sell off the Portuguese opco in 2021 to raise up €10 billion, depending on which report you believe, but had had no takers.
Now Altice reputation has been sullied by an accounting scandal in Portugal which broke in July, spooking investors in and beyond that country, with Drahi’s co-founder under house arrest.