Altice USA targeting private equity infrastructure funds in early Suddenlink sale negotiations, sources say

Altice USA, the fourth-largest U.S. cable company, is focusing on private equity infrastructure funds as potential buyers early in its Suddenlink sale process, according to people familiar with the matter.

Altice USA Chief Executive Officer Dexter Goei confirmed Wednesday the company has begun a sale process for Suddenlink, a cable provider that offers service to 17 states including Texas, Louisiana and West Virginia. Altice USA acquired Suddenlink for $9.1 billion in 2015. Bloomberg first reported the talks of a sale.

Altice USA’s financial advisers have reached out to more than a dozen private equity funds in hopes of finding a buyer, said the people, who asked not to be named because talks are private. There have been no discussions yet with Charter, the second-largest U.S. cable company and a potential suitor, given its lack of a geographical footprint in many of the places Suddenlink serves, the people said.

A spokesperson for Altice USA declined to comment on potential buyers.

The valuation of publicly traded cable assets Comcast and Charter have come down about 25% or more this year as broadband internet growth has slowed. Altice USA is interested in selling Suddenlink so it can focus on running the assets formerly called Cablevision, which is further along in its transition to fiber, a higher-speed network that can better compete with growing competition from wireless companies. Goei said Wednesday those assets will be “pretty fully fiberized” by the end of 2024.

Altice USA doesn’t have a set target price in mind for Suddenlink, the people said. The discussions to sell Suddenlink are still early and no deal is assured, the people said.

Some infrastructure funds specialize in making the shift from cable to fiber, which is why Suddenlink may be an appealing acquisition for a fund looking to invest in an asset it can sell later.

Blackstone Infrastructure Partners, EQT, and Stonepeak are among funds that have made cable or fiber network acquisitions in recent years. Stonepeak paid more than $8 billion of Astound Communications, the sixth-largest U.S. cable provider, in 2020.

Private equity infrastructure funds are also interested in acquiring WideOpenWest, which offers cable service to regions of the country that already have another cable operator with a license to offer internet, phone and TV service. Bloomberg reported in May that Morgan Stanley’s infrastructure investment arm was interested in buying the so-called cable overbuilder, which has a market valuation of $1.7 billion.

If a deal for WideOpenWest, or WOW, happens first, Altice USA can argue Suddenlink should trade at a higher multiple. Suddenlink is the lone cable provider in about 70% of the markets it serves, making it more valuable to a potential buyer that wants more pricing power and fewer competitors.

Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC.

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