The Hard Times: Patrick Drahi and His Altice Empire Battle the Increasing Cost of Maintaining $50 Billion of Debt
After a decade of aggressive global expansion, the European telecom titan faces the challenge of higher interest rates and lower asset valuations
After a decade of global expansion that has seen his Altice telecom empire proliferate across Europe and the U.S., Patrick Drahi is facing the hard times.
According to Bloomberg, the Moroccan-born Israeli billionaire is dealing with the rapidly increasing cost on a debt load that now exceeds $50 billion.
In late January, the news service noted, Drahi was able extend maturity on nearly $5.8 billion of debut held through his Altice France S.A. operation. But that resulted in additional annual interest costs of more than $100 million before tax credits.
Meanwhile, a significant portion of Altice’s bonds and loans are trading at or near distressed levels, Bloomberg said.
Drahi took advantage of historically low borrowing costs as he engaged in a series of aggressive telecom acquisitions, including his $17.7 billion purchase of Cablevision in 2015, as well as his simultaneous $9.1 acquisition of another U.S. cable company, Suddenlink.
More recently, the 59-year-old Drahi spent approximately $4.2 billion to purchase an 18% stake in British telecom giant BT Group.
But borrowing costs have risen as the value of these assets have declined.
Share prices for Altice USA (aka the former Cablevision Systems) have decreased nearly 67% over the last year, with the New York-focused operator facing heaving competition from myriad sources for its core business of ISP provision.
Notably, Drahi recently rejected lower-than-expected bids for Suddenlink that could have generated around $20 billion to help pay off debt, sources told Bloomberg.
But there is a growing consensus among telecom industry watchers that Drahi soon won't be in a position to be as selective, and that asset divestments will come soon.
Francois Godard, an analyst at Enders Analysis Ltd., described Drahi's situation as “complex,” adding, “We’ll see if he was swimming naked.” ■
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Daniel Frankel is the managing editor of Next TV, an internet publishing vertical focused on the business of video streaming. A Los Angeles-based writer and editor who has covered the media and technology industries for more than two decades, Daniel has worked on staff for publications including E! Online, Electronic Media, Mediaweek, Variety, paidContent and GigaOm. You can start living a healthier life with greater wealth and prosperity by following Daniel on Twitter today!