Altice France offers creditors 15% stake

The move, reported by Bloomberg, citing the usual unnamed sources familiar with the matter, forms part of Altice's ongoing quest to sort out its weighty debt problem and comes after creditors themselves suggested an alternative approach that could see Patrick Drahi lose control of the telecoms group.

It also coincides with news emerging from Portugal that the telco is in talks with Morgan Stanley about the sale of the remainder of its local unit's wholesale fibre network assets, again as part of the drive to reduce leverage.

The bean counters at Altice have been busy for years and show no signs of getting a break any time soon.

Altice France and its creditors have apparently been batting leverage-reduction ideas back and forth for a few months.

This latest salvo comes from Altice, according to Bloomberg's sources. Specifically, it has floated an informal proposal to its secured creditors that they write off between 10% and 15% of their principal in return for an equity stake of the same size in the telecoms company. There are other elements to the plan, including the extension of the maturities by a certain number of years with a lower interest rate than the existing debt, the newswire said. However, it does not include any funding injection from Drahi himself, nor does it impact on Drahi's control of the company.

That last point is important, given that this proposal comes in response to a move from creditors in September, again reported by Bloomberg, which could have seen them end up with a bigger stake in the firm than Drahi. That proposal followed an earlier suggestion from Altice that included a 20% haircut for creditors, the newswire explained.

There's every chance that this is not the last proposal we will hear about. The newswire's sources indicate that this latest suggestion would still fall short of Altice France achieving a sustainable capital structure.

We've heard little else but debt-reduction from Altice of late. But all this talk of debt-restructuring in France seems to have replaced whisperings that mobile operator SFR could be on the block as part of a broader asset sales move from its parent company.

Those asset sales are still happening though, if reports from Portugal prove credible.

According to the Jornal Economico, Altice is in talks with Morgan Stanley in Portugal regarding the possible sale of its controlling stake in the FastFiber business it created nearly five years ago. In late 2019 Altice revealed that it had brokered a €2.3 billion deal with Morgan Stanley that would see it take a 49.99% stake in an as-yet unestablished wholesale business.

Morgan Stanley had the right of first refusal over Altice's retained 50.01% holding and now it seems it could be ready to exercise that right.

The Portuguese newspaper had little offer on top of the fact that the two co-investors are holding talks, but given Altice's debt woes it seems highly likely that it could be pushing for a sale, particularly now – as the paper states – an overall sale of Altice Portugal, including former incumbent Meo, has been mothballed.

There's a lot of uncertainty still in both of these press reports, but it's probably fair to expect something concrete from Altice before too much longer. That debt pile will not shrink itself.