Charter Communications Inc. is considering the possibility of acquiring Altice USA Inc., a smaller cable provider, as reported by sources familiar with the matter. The news of this potential takeover caused Altice USA’s stock to surge, reaching a 63% increase, marking its most significant gain since its spinoff in 2018. Altice USA, with over $25 billion in debt, experienced a 36% rise in its shares, closing at $2.49 in New York, resulting in a market value of approximately $1.14 billion.
Charter is currently engaging with financial advisors to evaluate the potential benefits of acquiring the US broadband and video services provider. However, it is uncertain whether a formal approach has been initiated, and Charter may ultimately decide not to proceed with the transaction. Both Charter and Altice USA declined to provide comments on the matter.
Altice USA, a spinoff from Altice NV in 2018, stands as one of the major broadband and video services providers in the US, serving nearly 5 million residential and business customers across 21 states. Meanwhile, Charter has been grappling with a decline in broadband customers amid heightened competition from wireless providers. The shift of customers from traditional TV packages to streaming content, coupled with fierce competition from mobile phone providers offering wireless broadband services, has posed challenges for cable providers like Charter.
Charter’s shares have also witnessed a downturn, experiencing a 22% decrease over the past year. On the other hand, Altice USA’s shares had previously plummeted by 53% before the recent surge. Despite the recent gains, the stock’s value remains less than 7% of its peak valuation in 2020.
These developments coincide with billionaire Patrick Drahi’s indication that every segment of his Altice empire is available for sale. The escalating interest rates and financing expenses have posed challenges to Drahi’s debt-driven business model, which established his group as one of Europe’s most leveraged companies. Additionally, Altice is currently under scrutiny in Portugal due to a corruption probe involving Drahi’s inner circle, further complicating the situation.
