**Editor’s Note: Please click here for a recap of the biggest channel-impacting merger and acquisition news from July.**
The latest M&A drama involving Charter Communications comes out of left field with a French telecom giant weighing a buyout.
According to a CNBC report, Altice and its U.S. cable subsidiary, Altice USA, are planning a bid to buy America’s second-largest cableco in what could be a $200 billion deal. Altice and its founder, Patrick Drahi, have been interested in expanding in the United States, it said.
Neither Altice nor Charter would comment.
Michael Jude, Stratecast/Frost & Sullivan’s consumer communications services research manager, tells Channel Partners this acquisition would make some sense in that it would give both Altice and Charter a better position with content providers and would “probably provide economies of scale and scope that would be attractive.” However, such a deal is not very likely, he said.
“(Sprint owner) SoftBank has already expressed interest in Charter and Charter has been pretty ambivalent about any deals with them,” he said. “While this could conceivably turn into a bidding war, unless the acquiring company is willing to bring a lot of cash to the deal, it is unlikely to happen. Charter is carrying a substantial amount of debt … any debt-funded acquisition wouldn’t make much sense from a business perspective.”
Altice delivers products and services to more than 50 million customers over fiber networks and mobile broadband. It also is a global provider of enterprise digital services to millions of business customers.
Talk of a Sprint-Charter merger has persisted even after Charter said it’s not interested in such a deal. And earlier this summer, Charter reportedly rejected a buyout offer by Verizon valued at more than $100 billion.
“It is interesting that Charter has become a target of so much acquisition interest,” Jude said. “While it has many positive attributes, it is not exactly a prime target for acquisition. I would think that any company acquiring it would be looking at additional M&A opportunities as well. Charter comes with a high price: as a component of any multiple entity deal, it would suck the life out of further acquisitions and its continuing revenues would be unlikely to fund any additional opportunities.”
Last month, Altice USA launched Altice Business, a national provider of data, voice, video and managed services for business customers.