Altice and Verizon Wireline? Really?

June 4th, 2015 by · 1 Comment

Yesterday, a new bit of mega M&A speculation started making the rounds. Michael Rollins, a Citigroup analyst, suggested that after its Suddenlink purchase the French group Altice might have more on its mind than US cable assets like Cablevision, that in fact it might cross the cable/ILEC chasm and buy Verizon's local wireline business.

That would be FIOS and the remaining copper and what it hooks up in Verizon's remaining home territories, but not the global enterprise/wholesale networking business. He put the price tag in the neighborhood of $34B. That would be only about $11B more than Verizon claims it spent on the FIOS buildout itself.

Verizon is in the process of selling some $10.5B in assets to Frontier already, but the idea of Altice buying the remaining core 9-state-plus-DC footprint is just mind boggling. It's also probably crazy even if it does make a lot of sense.

Verizon would be able to focus almost exclusively on its wireless business, whether using the proceeds to reduce debt load, or to spend even more on spectrum, or to buy more content assets like AOL. That would finish off the company's current trajectory quite cleanly. Meanwhile, FIOS and the remaining copper footprint isn't all that different these days from a cable business, and there's no logical reason Altice wouldn't see it that way.

Yet it's hard to imagine Altice wanting to be a US ILEC, putting itself in the position Verizon is in when it comes to the older bits of its network. You know, the spots they really don't want to upgrade to fiber and are pushing consumers to accept substitutes that don't quite measure up. $34B is a lot to spend to step into those shoes as a foreign company, especially since the next question would be whether they'd restart the FIOS expansion and take Google Fiber by the horns.

I rather doubt it will happen, but it would certainly would shake up the status quo.  It would be interesting at the negotiating table to be sure.

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Categories: Cable · ILECs, PTTs · Mergers and Acquisitions

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