UPDATE 3-Altice plans $1 bln share sale as European cable sector booms
* Cable sector popular as consumers seek fast broadband
* Altice owns cable operators in France, Israel, Portugal
* Expanding into mobile in Israel, Dominican Republic
* Sale of 25 pct of share capital expected in next month
* Proceeds to be used to pay down debt
By Leila Abboud
PARIS, Jan 7 (Reuters) - Altice, which owns French and Belgian cable companies and mobile operations in Israel, plans to list its shares on Amsterdam's NYSE Euronext with the aim of raising 750 million euros ($1 billion) to cut debt.
The company, founded by entrepreneur Patrick Drahi and built via a decade of acquisitions, is seeking to surf a wave of investor interest in the European cable sector as consumers increasingly turn to these companies for television and high-speed broadband at faster speeds and lower prices than from telecom companies.
That in turn has pushed cable valuations higher and created several takeover targets for telecom rivals. French cable operator Numericable, which is 40 percent owned by Altice, has seen its shares rise 10 percent since it went public in November. European cable leader Liberty Global is seeking to buy the 71.5 percent of Dutch player Ziggo that it does not already own.
The Altice listing also builds on growing confidence about initial public offerings (IPO) in Europe - a flurry last year more than doubled volumes to $34.9 billion - and global equity fundraising in general, which is having a resurgence as confidence in the economy improves.
Altice's share sale - as well as the possible float of British oil services company Expro by its private equity owner Arle Capital Partners - will kick off the IPO calendar in Europe this year. A source with knowledge of the matter said Arle had appointed Deutsche Bank and Goldman Sachs to advise it on exit options, and that a listing of Expro could take place this year. Arle declined to comment.
Altice's IPO will take place some time in the next month and be open to institutional investors in the Netherlands, United States, and other qualified countries.
Altice's IPO will include an issue of new shares by the company, which is now owned by Drahi and management, as well as a sale of existing shares by Next LP, a holding company owned by Drahi. Altice will have a free float of 25 percent before the exercise of any over-allotment option.
Reuters reported in mid-December that Altice was considering a share listing.
Chief Executive Dexter Goei said on a conference call that the proceeds would be used solely to pay down debt, but the listing would have the additional benefit of giving Altice more flexibility on acquisitions.
"Our primary reason to go public is to have a form of currency to do further acquisitions and we can only do that by tapping into public equity markets," he said.
Asked whether Altice's owners would later sell additional shares to increase the size of the free float, Goei said: "Our intention is to get diluted via acquisitions."
The group's pro forma net debt stood at 6.9 billion euros as of September 30.
Altice has grown revenues not only via deals in recent years, but also organically as consumers look for better deals than those offered by telecoms firms. It has also expanded into mobile, first in Israel where the company is the number one pay-TV provider and more recently in the Dominican Republic where it agreed to buy Orange's mobile business for $1.4 billion in November.
Altice's IPO presentation published on Tuesday highlighted a potential pipeline of acquisitions in cable and telecoms that could create value for shareholders in the coming years. Goei said the priority would be to consolidate markets where Altice was present, such as France where Numericable could tie up with telecom rivals Vivendi's SFR or Bouygues Telecom.
"We have a strong track record on acquisitions," said Goei.
In the nine months ended September, Altice's adjusted earnings before interest, tax, and depreciation were 1.02 billion euros, giving it a margin of 42.3 percent.
Revenues in the same period grew 1.1 percent to 2.4 billion euros, with France providing 45 percent of sales and Israel 27 percent.
It remains to be seen how investors will respond to Altice's share offering and where it will price.
According to Thomson Reuters data, Dutch cable group Ziggo is valued at 10.5 times EBITDA, Belgium's Telenet at 10.1, and Germany's Kabel Deutschland, which is being bought by Vodafone, is valued at 11.9 times. France's Numericable, which is backed by Altice, is valued at 9.3 times EBITDA.
Goldman Sachs and Morgan Stanley are running the offering, and also acting as joint bookrunners along with Credit Suisse, Deutsche Bank and HSBC.
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