Telecom group Altice USA collected first-round bids late last week in a process to find an equity partner to fund a joint venture that would build fiber-to-the-home networks, said three sources familiar with the matter.
Altice has been working with Lazard on the fundraising for the JV, two of the sources added.
The New York-based cable provider is talking to bidders about locations and a capex figure for the JV-related projects, two of the sources said. The buildout will reside outside of Altice’s current footprint, one of the sources added.
Executives aim to have the JV build at a pace of 1 million passings per year, ultimately reaching 10m homes, one of the sources said.
The review follows similar efforts by telecom giants AT&T and T-Mobile US to find partners to back the expensive construction of fiber networks. Infrastructure investors are among the potential investors for the projects.
Two months ago AT&T struck a deal with Blackrock to create a fiber JV for open-access FTTH construction outside of the teleco’s footprint.
Altice carries heavy leverage from past acquisitions with USD 24bn in consolidated net debt and a just under USD 2bn market cap.
On Wednesday, the cableco reported that revenue and adjusted EBITDA declined in 2022, falling 4.4% and 12.7% YoY, respectively. Leverage stood at 6.3x adjusted EBITDA as of 31 December.
In the face of stiffening competition from regional fiber startups and teleco incumbents, cable companies have been acquiring wireless assets and building their own fiber networks to retain or recapture market share.
For several years, Altice has been upgrading its cable network with FTTH in its Optimum footprint, the preponderance of which serves parts of New York, New Jersey and Connecticut. Executives today said on the firm’s full-year 2022 earnings call that the company rolled out FTTH to almost 1 million homes last year.
Asked by an analyst about the potential JV, CEO Dennis Mathew declined to comment.
Optimum makes its cable and fiber services available to more than 8.2 million people throughout the Northeast, according to industry data provider Broadbandnow.
Altice’s Suddenlink affiliate, which operates in the South and West, has also been busy adding FTTH offerings. After canceling a sales process for Suddenlink, Altice finished merging that brand with the Optimum business toward the end of 2022.
All told, Altice offers its cable, internet and other services to more than 5 million customers across 21 states. In February last year, executives said they wanted to have the company’s FTTH network reach 6.5 million homes passed by 2025 with more than half of that in the Northeast.
Last year’s buildout was estimated to cost roughly USD 1.7bn for almost 1 million passings. Altice said it plans to expend the same level of capex this year, although it could reach USD 2bn if opportunities arise in the West.
Altice’s net adds to its fiber broadband service amounted to a little over 100,000 customers last year – a figure that also included existing customers migrating over to the new network service.
Altice and Lazard did not return requests for comment.
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