×

Altice beats estimates with third-quarter earnings as it plans growth in the US

Transatlantic telecoms company Altice does not plan any big acquisitions in the near-term as it focuses on establishing its platform in the U.S. and continuing with the turnaround underway at its French unit SFR, the company's CEO has told CNBC.

This as the company posted a strong set of third-quarter results which showed a return to group revenue growth, as well as margin expansion in all main markets, helping group EBITDA (earnings before interest, taxes, depreciation, and amortization) to 2.33 billion euros, ahead of consensus of EUR 2.21 billion ($2.4 billion), according to Reuters.

While SFR continues to see falling revenue, the business's results were in line with its aim of reining in the rate of shrinkage with Chief Executive Officer (CEO) Michel Combes reconfirming guidance for 2016 of revenue improving from 2015's -3.5 percent rate of growth and EBITDA growth moving into the black.

The French telecom industry has been characterized by brutal price wars in recent years but the most recent quarter saw more of SFR's competitors follow its strategy initiated in earnest earlier this year of seeking to compete on content offerings and customer experience instead of discounts.

The CEO told CNBC that this shifting landscape would play to SFR's advantage.

"I guess we are well placed. I mean that's all about our strategy which was to invest in networks," he said, adding that the company was trying to deliver the best customer experience and invest in content as well.

This quarter was the first full quarter for the group's Altice U.S. division, formed from a combination of recently acquired Cablevision (rebranded Optimum) and the 2015 acquisition of Suddenlink,

In a stellar quarter for this unit, annual EBITDA growth shot up by around a third at Optimum and by over 20 percent at Suddenlink, as management focused on infrastructure improvements to network and a more enticing customer proposition via broadband upgrades and content packages.

Rumors of a potential public offering of the U.S. business have abounded recently, with analysts, including Barclays, saying investors may welcome the ability to choose more directly between the strategy for the U.S. business and the French business.

However, Combes said for now the focus is on integrating and growing the U.S. operations.


According to the CEO, "We have just been in this market for nine months so we firs have to execute and that has always been my message to the company."

In other positive developments, the company's aggressive leverage position which sat at around 6.0 times EBITDA (annualized for the prior two quarters) at the start of the year has been reduced to around 5.4 times.

This as the company continued to refinance its financing portfolio, with the weighted average cost of debt at around 6 percent in line with the level before the refinancing and no big chunks of maturities coming due until around 2020 at Suddenlink and 2022 at Optimum.

Despite growing expectation of a Federal Reserve rate hike in December, as well as mounting chatter over looming inflation, the CEO told CNBC he was not concerned about rising interest rates.

In Combes' words, "Most of our debt is at fixed rates. Which means that if we have spread well in issuances ... We don't have a major issue for the medium to long term."