Cable giant Altice USA, led by CEO Dennis Mathew, has decided not to pursue a sale of its Suddenlink business after saying earlier this year that it would shop it with an eye toward a possible divestiture or other deal alternatives after fielding interest from several buyers.
In 2020, the company had sold its Lightpath fiber enterprise unit to Morgan Stanley Infrastructure Partners. But bankers and analysts have noted that depressed stock prices have made deals trickier as of late.
On Thursday, Altice USA said in a statement that “it has concluded its previously announced review of strategic alternatives for its Suddenlink business.” It continued: “Over the course of the past several months, the company has been considering options for, including the potential sale of, its Suddenlink business. Following this evaluation, the board of directors has unanimously determined that continuing to operate Suddenlink and pursuing the company’s long-term business plan represents the best path forward for Altice USA and its stockholders.”
Wall Street analysts have in the past said that Altice, which provides pay TV, broadband and telephone services to approximately 4.9 million residential and business customers in 21 U.S. states, could sell Suddenlink, which it had acquired in 2015 for $9.1 billion, followed by a $17.7 billion takeover of Cablevision. That could help the company reduce its debt load, among other things.
Bloomberg reported on July 21 that Altice USA was looking at selling Suddenlink, which operates in the south-central U.S. for a potential price tag of $20 billion, including debt, to reduce its debt load. Management later confirmed it was looking at strategic options.
MoffettNathanson analyst Craig Moffett, in a report back then, argued though that the reported price tag would be rich given the unit’s estimated earnings before interest, taxes, depreciation and amortization of $1.3 billion. “$20 billion would represent a 15.4 times multiple,” he wrote. “That might have been a reasonable valuation range in 2020 or 2021, but with rising inflation, rising interest rates and falling prevailing valuations, that no longer strikes us as a reasonable multiple.”