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11/06/2017

Altice Jumps Into U.S. Wireless Business in Deal With Sprint

Altice USA struck a deal with Sprint Corp. that will allow the cable operator to sell wireless service using Sprint’s network.

As part of the agreement, Sprint will use Altice’s broadband infrastructure to strengthen its nationwide wireless network, according to a statement from both companies that didn’t disclose financial terms. Talks between Sprint’s majority owner, SoftBank Group Corp., to combine the carrier with T-Mobile US Inc. collapsed over the weekend after months of negotiations.

The deal between Altice and Sprint marks the latest example of a U.S. cable operator entering the wireless business to compete with giants like Verizon Communications Inc. and AT&T Inc. Comcast Corp., the nation’s largest cable operator, recently started selling cellular service using Verizon’s network. Charter Communications Inc., the No. 2 cable operator, plans to enter the wireless business next year.

Offering cellphone service, in addition to TV and high-speed internet, could help cable companies keep customers as many drop pay-TV for cheaper online options.

“As content and connectivity continue to converge, we believe this approach will be a model for future strategic arrangements across multiple industries including cable, tech and others,” Sprint Chief Executive Officer Marcelo Claure said in the statement. He had said in May that the company was working on a mobile virtual network operator pilot program with a partner he didn’t name.

Altice has 4.9 million customers, including many around the New York City suburbs. It acquired Cablevision last year to become the fourth-biggest U.S. cable operator. Altice hasn’t determined yet when it will enter the wireless market, according to a company spokeswoman.

The Altice wireless service could start in the second half of 2018, as ramping up the operation will require time and investment, said Thomas Coudry, an analyst at Bryan Garnier.

The deal “makes sense in our opinion, as required capital intensity is limited, and we believe Altice USA wants to keep its M&A firepower for cable operations,” Coudry said in a note to clients.

Altice isn’t new to the wireless industry. It is a subsidiary of Altice NV, which is led by Patrick Drahi and offers cellular service in several countries, including France, Portugal and Israel.

The company plans to double its U.S. cable presence in the next five years after assembling the unit through $26 billion in acquisitions, including purchases of Cablevision Systems and Suddenlink. Altice USA had an initial public offering in June to raise cash for future deals, and in August, Altice was working on a potential offer to buy Charter, people familiar with the matter said at the time.

Shares of the parent declined 0.3 percent to 12.48 euros at 12:02 p.m. in Amsterdam.

https://www.bloomberg.com/news/articles/2017-11-05/altice-jumps-into-u-s-wireless-business-in-deal-with-sprint