Altice exploring bid for Charter Communications: banking sources

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Altice is exploring a bid for Charter Communications, the second-largest US cable operator and owner of assets formerly held by Time Warner Cable, banking sources said Wednesday.

A deal would give the French telecom giant and its leader Patrick Drahi a major foothold in the US in a historically profitable sector now challenged by the rise of online streaming that is eroding key revenue streams.

Altice USA went public in June on the New York Stock Exchange and Drahi signaled at the time his interest in a significantly bigger presence in the United States.

Altice's push comes amid reports that Japan telecom giant SoftBank also is considering a bid for Charter. The banking sources said Altice has yet to make an official offer.

Either Altice or SoftBank likely would need to take on debt to help finance a takeover. Altice had 49.2 billion euros ($57.8 billion) of debt at the end of June.

Altice and Charter both declined to comment on the possible deal.

Altice USA has a market capitalization of about $23 billion, while its French parent company has a market capitalization of about $90 billion.

Charter, with a market capitalization of $118 billion, would be a big fish to swallow. But Altice is accustomed to chasing larger companies, banking sources said.

Altice acquired US cable operators Suddenlink Communications in 2015 and Cablevision/Optimum in 2016, forming Altice USA.

Altice is investing in fiber-optic connections and plans to introduce a new kind of cable box for the US market.

Besides cost savings from combining operations, a deal with a US giant like Charter also would give the French company more clout with content creators as streaming services increasingly challenge cable's traditional business.

Drahi has built a formidable media empire in France, including the business television channel BFM TV, the Liberation newspaper and news weekly L'Express.

Drahi bought France's second-largest mobile operator SFR in 2014 for 17 billion euros ($20 billion).

Altice's step towards Charter brings Drahi back into the universe of US media mogul John Malone, chairman of Liberty Media, a major Charter shareholder, and a mentor of sorts to Drahi.

Shares of Charter rose 2.6 percent to $399.99, while Altice USA dipped 0.2 percent to $30.96 in midday trading.

© 2017 AFP

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