Jan 31, 2023
Billionaire Drahi’s Altice Sees BT Group as ‘Undervalued’
(Bloomberg) -- Billionaire investor Patrick Drahi’s Altice Group sees BT Group Plc as an “undervalued” asset and “fundamentally we continue to like” the firm, Dennis Okhuijsen, a financial adviser to the French telco, said in an interview.
Altice has built up a stake of about 18% in the UK phone and internet provider, fueling speculation about its future plans for the firm. BT’s stock has fallen by about a third since the day before Drahi first unveiled his stake in June 2021.
While questions remain over the French billionaire’s ultimate ambitions regarding BT, Okhuijsen said that any money obtained from asset sales in France would be used to pay down debt there.
“In France, we are in deleveraging mode, because we’re not at our leverage targets for France,” he said. “We will not take money out to invest for BT. We are by far the largest shareholder in BT today, which we feel is a very comfortable situation for now.”
The company has had enquiries from buyers seeking to purchase some of its data centers in France and is exploring “very good” interest, Altice Europe Chief Financial Officer Malo Corbin said in the interview.
Okhuijsen and Corbin were speaking after the firm pushed 75% of its 2025 and 2026 term loans to August 2028 as part of an amend and extend deal with bondholders.
That transaction, which includes higher interest payments and stronger investor protections, is part of a wider trend of borrowers offering incentives to keep investors locked up after the unprecedented pace of central bank interest-rate hikes caused demand for high-yield issuance to dry up.
Altice had been expecting at least 50% of investors to partake so the acceptance rate was at the higher end of expectations, Okhuijsen said.
The deal will boost interest payments by more than €100 million ($108 million) a year before tax deductions, he added. Net debt is largely unchanged. The firm also raised €150 million of new money in the latest term loan, which will be used to repay a revolving credit facility.
Cash flows from France “will be increasing in the next two years, capex will come down, Ebitda will continue to grow. So, it’s a modest increase, I think, in terms of interest expense,” he said. “If market conditions are going to be better in 12 months time, we can reprice these loans down to hopefully more advantageous levels.”
Altice Portugal is starting to generate “massive cash flow” which has drawn buyer interest, Corbin said. “We like our current footprint,” he said. “The asset is not for sale.”
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