Altice ready to sell data centres and possibly SFR

Altice is on the verge of agreeing a deal worth as much as €1 billion to sell its French data centres to Morgan Stanley and, more surprisingly, is considering offloading SFR, press reports indicated this week.

The operator is about to ink the sale of all or some of its 92 data centres in France to Morgan Stanley’s infrastructure fund, Les Echos reported this week. The French paper did not cite its sources, nor was it able to secure a comment on the matter from either Altice or Morgan Stanley. Nonetheless, the story seems highly credible.

Altice has been in turmoil since Portuguese authorities instigated a corruption investigation earlier this year and just last month, Reuters reported, Altice owner Patrick Drahi told investors he would sell off assets as part of a plan to bring in around €3 billion to help reduce debt. At the time the company admitted that talks were ongoing regarding a possible data centres sale in France, pledging an update in its third-quarter results presentation.

Its unclear whether a sale announcement might now come sooner than that. However, it’s pretty clear that data centres are not that only assets on the block at Altice.

Reuters on Thursday noted that Altice has brought in at least four investment banks, Morgan Stanley included, to help it to carry out a review of its European assets with a view to selling off businesses that would help with the debt-reduction drive. Lazard, BNP Paribas and Goldman Sachs will also take part in the review, the newswire’s sources said.

They identified French mobile operator SFR as one of the businesses under the microscope, as well as telecoms businesses in Portugal – where Altice co-founder Armando Pereira was placed under house arrest in July – and the Dominican Republic, and advertising company Teads.

The sale of SFR would be an extreme measure. However, Bloomberg, which recently described Altice’s $60 billion debt pile as a “nightmare for creditors,” cites French newspaper Le Monde as saying the company is looking at selling part of the capital of Altice France, SFR’s parent company, which is perhaps a more likely, if less headline-grabbing, outcome.

Either way, we are unlikely to have to wait long to find out. Indications are that Drahi is in something of a hurry to tackle that debt burden.

Indeed, this week Drahi is meeting with investors in London and New York to explain his deleveraging strategy, Bloomberg reported. The newswire notes that the sale of the French data centre portfolio would have come sooner had it not been for the fallout from the corruption probe in Portugal. In a nutshell, Pereira stands accused of fraudulent behaviour and money laundering, and while Altice has distanced itself from the investigation, painting itself as the victim, the whole situation has naturally made investors jittery.

Drahi has made it clear he will do whatever it takes to deleverage and put Altice back on an even keel, so from here on in pretty much no course of action should come as a surprise.

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