The holding of Patrick Drahi, European telecommunications magnate, offers owners of the former state monopoly Lusitanian, the Brazilian Oi, shareholder, a sum of €7.025 billion.
Everything is financed by debt, as in the takeover of SFR by Numericable, but also by the cash of Altice. According to our information, the parent company of French cable operator is backed by a syndicate of five international banks: JPMorgan, Morgan Stanley, Deutsche Bank, Goldman Sachs and Credit Suisse.
The offer is limited to the assets of the Portuguese operator (does not include its possessions in Africa in particular) and excludes the debt of Rio Forte. This subsidiary of the Portuguese bank Espirito Santo had contracted in April a loan of 897 million euros to Portugal Telecom.
The bankruptcy of the parent company in mid-October had made very unlikely the repayment of the loan, poisoning relations between Portugal Telecom and Oi Brazil.
The Portuguese operator has had ever since then a turbulent period marked by uninterrupted drops of indices on the square in Lisbon: the market price of Portugal Telecom has lost almost 30% in a few weeks. The resignation of Zeinal Bava, CEO of Oi, on October 8, did not help the matter.
But this turbulent situation has not begun the interest of Mr. Drahi Portugal that already has added two similar operators to those held in France, Caboviso first, a cable operator similar to Numericable profile; and Oni, a specialist in ultra-fast broadband for professionals in image Completel.
“Portugal Telecom SFR comes together finally, it is strong in the mobile but also fixed. It also holds an extensive 4G coverage. This is a very attractive asset. This is a little local “France Telecom,” says a source close to Mr. Drahi.
The head of Altice, according to his family, never hidden its desire to consolidate its assets with other operators in the countries where he had the opportunity. Thus, the opportunity came to Lisbon with the will of the Brazilian Oi to separate local assets of the new entity formed from the absorption of Portugal Telecom in May.
Portugal Telecom could allow Patrick Drahi to achieve synergies with its assets Caboviso and Oni. “But those will be mostly managerial synergies,” says a source close to the businessman.
In an interview published in the daily Diario Economico, Dexter Goei, the CEO of Altice, explained that the Luxembourg holding company was ready to create 4000 jobs if the offer was accepted. This would mainly positions in call centers in the group.
“We could relocate to Portugal which is outside Europe, and why not also install some call centers working for us that have nothing to do with Portugal Telecom,” says a source close to the case.
Mr. Goei has also stressed the desire of Altice to invest in fiber and connect more possible territories ultra-fast broadband. “This is a long-term industrial project,” points out a person close to the matter.
The leaders of the parent company Numericable have spent the last week to meet with Portuguese politicians that would be displayed enthusiastic about the idea of a “European invest” in Lisbon.
“We know Portugal, we can develop the newly created entity, said a relative of Mr. Drahi. The company has suffered from the economic crisis in Portugal but also a management that has been lacking since the merger with Oi, which can be improved.”
In fact, Mr. Drahi has long worked with Armando Pereira, co-founder of Altice and director of technical operations, a native of Portugal who knows the country and its regulations.
But for analysts, if the asset is interesting, the operation is a little less. “This is a nice operator who invested quickly in fiber and 4G, but this is a mature country where there is little potential for growth,” says one of the experts.
“The synergies with local Altice assets are not so important because the situation in Portugal is not ideal,” says another analyst.
Some also believe that Altice is perhaps a little too much and they should focus on France disperses. “They are trying to absorb the second hexagonal operator SFR, maybe they should finalize it before embarking on the conquest of Europe. In Portugal, they still want to swallow an equivalent of France Telecom,” points out an observer.
To convince them Altice should demonstrate that its offer is the most viable. According to rumors in the press, the British fund Apax Partners and Spanish operator Telefonica and Vodafone UK are also interested in Portugal Telecom.