Altice upgraded to ‘buy’ in U.S. as CEO of struggling parent steps down in Europe

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Here in the U.S., where Altice rang up much of that debt by acquiring Cablevision last year for $17.7 billion and Suddenlink Communications for $9.1 billion, MoffettNathanson analyst Craig Moffett warned investors not to apply “guild by association” to Altice USA in regard to its parent company.

Altice USA was upgraded to “buy” status by a prominent investment analyst as debt troubles for its parent company in Europe claimed the job of the CEO yesterday.

Altice NV founder Patrick Drahi took back the reins of the parent company as CEO Michael Combes stepped down after less than a year on the job. Drahi is trying to reassure skittish investors, with about a third of Altice NV’s market capitalization evaporating since the company issued a profit warning on November 2. The telecom is currently trying to manage around $55 billion in debt. 

“This might sound like Altice is taking action but it changes nothing—the main problem at Altice is not one of management, but of an unsustainable capital structure,” Saeed Baradar, senior managing director at Louis Capital Markets, said in an email to Bloomberg.

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Here in the U.S., where Altice rang up much of that debt by acquiring Cablevision last year for $17.7 billion and Suddenlink Communications for $9.1 billion, MoffettNathanson analyst Craig Moffett warned investors not to apply “guild by association” to Altice USA in regard to its parent company. Altice USA, which had an IPO over the summer, has seen its stock crater in recent weeks as well, falling to a point at which Moffett said it is now a “buy.”

“Yes, there are some real challenges facing Altice USA in the legacy Cablevision markets. But there is a long runway ahead in the legacy Suddenlink business,” Moffett wrote in an email. 

“They have proven that they are adept cost-cutters. And, while we remain above consensus (and guidance) for capital spending over the near-to-medium terms all they build out their own FTTH facilities, we believe longer-term capital intensity will be lower than what is implied by current valuations,” Moffett added.