Altice Europe to buy telecoms fiber company Covage for $1.1 billion
PARIS (Reuters) – Debt-ridden telecoms and cable company Altice Europe (ATCA.AS) said it would acquire French fiber wholesale operator Covage for about 1 billion euros ($1.1 billion), expanding the range of its fiber network business.
Telecoms infrastructure has been a focus for takeover activity this year as countries invest in new networks. In one of the latest deals, private equity firm KKR (KKR.N) bought Britain’s fiber telecoms firm Hyperoptic in October.
Altice Europe said its deal, expected to close in the first half of 2020, would result in Altice’s SFR FTTH unit and Covage deploying fiber networks over the next three to four years, as France sets up new 5G telecoms networks.
The acquisition will be financed with 70 million euros worth of non-recourse debt, 465 million euros of cash equity to be contributed by Altice and 465 million euros of cash equity to be contributed by SFR FTTH’s financial investors.
MB Capital director Marcus Bullus said that, while the Covage takeover looked positive, it was unlikely to give much of a lift to the Altice stock price, which has already surged more than 200% in 2019 as a result of lower debts and better results.
“Altice is not a stock we like, and although we view this as a positive move for the company to be proactive and make this purchase, overall we don’t see this as a catalyst to create any movement for shareholders short to medium term,” said Bullus.
Roche Brune Asset Management fund manager Gregoire Laverne echoed those views, saying Altice Europe’s debts remained a cause for concern. Altice Europe had net debts of around 30.6 billion euros at the end of the third quarter.