Altice flogs media business for €1.55 billion

The telecoms operator has entered into an exclusivity arrangement with shipping group CMA CGM on a cash deal for Altice Media, owner of high-profile French news channel BFM and radio broadcaster RMC.

Under the terms of the deal, CMA CGM, owned and led by shipping tycoon and businessman Rodolphe Saadé, will take an 80% stake in Altice Media, with its family holding company Merit France picking up 20%. The deal requires negotiations with employee representatives and has regulatory hurdles to clear, but Altice expects it to close this coming summer.

Altice has been on a public debt-reduction drive since last summer, when owner Patrick Drahi shared plans to bring in around €3 billion by selling off assets to help reduce the US$60 billion pile. It has since sold a majority stake in its data centres business – valued at €764 million – to Morgan Stanley and has reportedly lined up suitors for its French fibre operations. The group's business in Portugal is up for sale and has drawn a lot of interest too.

Saudi Telecom Company (STC) is widely reported to have emerged as the frontrunner in the race for Altice Portugal, as confirmed by Portuguese news outlet the Jornal Economico when it reported late last week that a consortium of funds Warburg Pincus and Zeno Partners, backed by Portuguese banker António Horta-Osório, has dropped out of the running.

STC would likely need the support of Portuguese companies in order to get any deal over the line, the journal noted, but indicated that Portuguese funds are looking to join forces with the Saudi telco. It's starting to look like an announcement could come fairly soon on that sale.

Sticking with Portugal for a moment, Altice last week revealed that it has paid two fines totalling €124.5 million imposed by the European Commission as long ago as 2018 in connection with its acquisition of Portugal Telecom. The Commission accused Altice of 'gun jumping.' Essentially, Altice pushed ahead with the deal before completing the required notifications and without waiting for the Commission to clear the deal. Altice said it paid up in the fourth quarter of last year. The fine is not linked to the corruption investigation against Altice in Portugal.

Presuming Altice gets the go-ahead from the relevant bodies for its French media assets sale, the transaction will give its money-raising efforts a serious boost. Indeed, analysts have implied that CMA CGM is – willingly – overpaying for Altice France.

Reuters noted that the €1.55 million enterprise value ascribed to Altice Media represents a 14x core profit multiple and quoted Philippe Bailly, a media consultant at NPA Conseil, as saying "it's a rather generous ratio." Bailly said he believes there is a little premium on the deal due to the influence of the brands included in it. Essentially, CMA CGM's Saadé gets to build up an ambitious media group without putting in another five years of effort.

Saadé himself said as much, pointing out that the proposed acquisition is about CMS CGM's ambition to pursue its long-term development into the media sector.

"Altice Media is a reference media group, with strong growth, talented teams, and iconic brands," Saadé said. "Altice Media's complementarity with CMA CGM's existing Media Division and its renowned medias, La Provence, Corse Matin, La Tribune et La Tribune Dimanche, will be a key strength."

For its part Altice talked up both the strength of the media business and Patrick Drahi's "close and friendly relationship" with its would-be new owner Saadé, but didn't have a lot to say on the rationale for the deal from its side.

Then again, there is likely little to add. Altice has already had plenty to say on the subject of debt-reduction.