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Altice share plunge costs CEO Combes his job

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The share price of French telecoms group Altice has been going down the toilet, resulting in the departure of CEO Michel Combes.

The value of the company has been in steady decline since the middle of this year, but fell off a cliff last week following its Q3 earnings announcement, which revealed higher than expected churn at French mobile operator SFR and warned that group earnings are expected to grow at the lower end of its guidance range. The current public value of the company is less than half what it was in early August 2017.

It looked like the scapegoating had been concluded early when the SFR Deputy CEO Michel Paulin decided to quit ‘for personal reasons’ on 11 September, with Combes clinging on. Not for long, it turned out, with the owner of Altice – Patrick Drahi – apparently deciding that if you want something done properly you have to do it yourself.

“Michel has been an important part of the Altice story when he first joined the Board of Altice,” said Drahi. “He provided key support and judgment as we developed our expansion strategy. As CEO, Michel critically created the group structure to operate a transatlantic communications business while driving key technology, research and innovation initiatives, which will serve Altice for the future. I would like to personally thank him for his contribution, integrity, loyalty and friendship.” You’ve got a funny way of showing it Patrick.

“I would like to thank Patrick and the team for their confidence over the past years,” said Combes, who presumably got a tidy pay-off. “It has been a privilege to be part of the Altice story, accompany the expansion of the group and lead the industrialization of the convergence strategy. With Patrick returning as President of the group, Altice will be well positioned to execute its strategy across all operations.”

Combes had only been at Altice since the middle of 2015, having moved on from Alcatel-Lucent when it was acquired by Nokia. Within a year of joining as COO he was promoted to CEO, presumably because he’d done such a great job. The CEO role will be filled once more by his predecessor Dexter Goei, who has been heading up Altice’s US efforts, but the big change is that Drahi himself is returning to day-to-day management, with SFR at the top of his to-do list.

It looks like Drahi has his hands full. Altice has gone big on content acquisition, especially in France, but with subscriber numbers heading in the wrong direction it’s hard to view that as a success. Furthermore the group is sitting on a ton of debt from its M&A frenzy of recent years, leaving it especially vulnerable to macroeconomic fluctuations. It’s going to take more than a slick corporate rebrand to sort all that out.

 


2 comments

  1. Professor Peter Curwen 20/11/2017 @ 3:54 pm

    Every now and again a telco gets this great idea: Adopt a ‘disruptive’ model and bingo, market leadership in multiple countries will transpire. Or not. Yes, Hutchison tried it and survived without gaining much market share but there was a filthy rich parent to absorb the losses – and there were lots of them – but elsewhere?
    And it is not as though the ideal assets are just sitting around begging to be bought cheaply so forget the bargains, pay through the nose, take on the debt and repay the debt…er, last bit is the problem. Competitors are not going to sit around being disrupted, and the number of incumbents per country is quite small so they tend to have a fair bit of market power.
    There is a lot of asset shedding going on currently. Empire building is so last year.

    • Scott Bicheno Scott Bicheno 20/11/2017 @ 3:58 pm

      Good points, well made.

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