There is a little more than a year, in September 2014, the cable operator Numericable, owned by the financial holding company led by Patrick Drahi Altice (main shareholder of Libération ), officially took possession of SFR, bought a few months earlier to the tune of 17.4 billion euros. But since then, the second French telecom operator had been very discreet, mobilized by the reorganization of the company and a hunting policy costs orchestrated by the all-out “Drahi boys” of the new telecoms tycoon. A silence broken this morning during a “keynote” broadcast live for 55,000 employees Altice group from the headquarters of SFR in La Plaine Saint-Denis. The opportunity to defend the new strategy and a group which, by multiplying the acquisitions in recent months has raised many questions about the sustainability of its business model based on debt.
long-term industrial project
“ It is neither frenzied nor bulimic, has tried to reassure the outset the CEO of Altice, Dexter Goei: just industrial “. The financier Patrick Drahi right arm took the opportunity to recall that the model is based on a Altice “ Double convergence ” between fixed and mobile networks on the one hand, between telecommunications services and content delivery on the other. A giant deliberately smashed remake of Jean-Marie Messier at the time when he headed Vivendi, but this time made possible by the maturation of new uses and technologies have become widespread since the early 2000s.
“ We will quickly, sometimes very quickly, which can generate on the occasion of tensions and tensions ” added the President of SFR and Altice new director of operations, Michael Combes. But let there be no mistake about the motivations of a group comprising at full speed and with total redemptions past 18 months is the amount ever 45 billion. “ we often see ourselves as financial when we are primarily engineers” , sued the former head of Alcatel-Lucent and Vodafone Europe, that the draft is Altice ” long-term industrial and . ”
A project made possible by the significant synergies qu’Altice would be able to generate Due to the very international dimension of the group (it is present in France but also in Israel, Portugal and especially with Portugal Telecom in the US with the recent acquisition of two cable operators). “ We are told that our debt levels hinders our ability to invest but it is not ,” said Michel Combes. He insisted the figure of four billion annual planned investments in fixed and mobile networks, half of which in France. “ Our debt represents 4.5 times EBITDA (note: Earnings before interest, taxes, depreciation and amortization) and our key deadlines in this area will not occur before 2021, which gives us 6 years” , he said. And to show qu’Altice does not intend to abandon the field of innovation, he announced the creation of “Altice Labs”, a network of exchanges between engineers in R & amp; D group scattered between its different countries implantation. What ‘ take leadership on the customer experience “, which implies a contrario qu’Altice not now at the forefront in this area.
From SVOD ultra high definition
Regularly criticized for the poor quality of its network, SFR took the opportunity to highlight massive investment to make up for a delay as the new owner does not deny, but he does not consider its effect, “ On bought a box off and very under-invested but this is not the fault of its current shareholder . ” Altice, announcing an acceleration “ significant ‘investments in the operator visible in the fourth quarter 2015, ensures that the quality of its network is starting to improve and there will be one that will put the more money in 4G in France next year to be at the rendezvous of the objectives set by ARCEP, the telecommunications regulatory authority.
In order to restore its reputation and does not limit itself to a defensive strategy, Altice presented its video-on-demand subscription for France. Called “Zive”, it will offer on November 17 to SFR subscribers and numericable a catalog of 5,000 films and series – 15 000 planned end of 2016 – present on 5 screens for 9.99 euros per month. Offer available on mobile and home via a new power-packed box incorporating the new broadcast standard Ultra HD 4K. A catalog of nearly 600 programs will be available in 4K output, which makes “Zive” offer to the most important day in France in this field.
The new box will be available for free to subscribers of premium to the offer “Power” Numericable, SFR (48.99 euros per month) This should allow the SVOD service Altice to overcome very quickly parks Netflix and CanalPlay, estimated for each around 700 000 subscribers. And on mobile, the service should replace CanalPlay the options “extras” offered to 4G subscribers. Other Numericable, SFR customers will have them put their hands in the pocket. It is unclear at this stage the price to be proposed to acquire their new box, a racing machine with a 500 GB hard drive and a rate of one gigabit per second.
Battle of content
With this announcement, Altice invites himself in the battle of content already launched by Netflix, Amazon, Orange, Canal + and others. And even if it remains primarily a network operator, as recalled by the general director of SFR, Eric Denoyer, the group of Patrick Drahi account also invest in exclusive content that will produce to the attention of its subscribers . Altice already does in Israel with his Hot operator, which produces its own series, reality TV shows and games and he was inspired to develop its “Zive”. With 40 million subscribers worldwide, Altice also plans to integrate its new VOD service in providing its various operators, Portugal and the United States. What recover the costs associated with operating the catalog following the global strategy of Netflix.
The content is at the heart of “ convergent project ” Altice, explained Michel Combes, in which 30% of TVs sold in 2016 will incorporate 4K technology. “ We are currently witnessing a flowering of new VOD services but only a limited number of platforms will be able to maintain” , says Eric Denoyer SFR. “ We believe that by also producing own content, we make it part .” And Gilles Pezet cabinet NPA Council told AFP, this new offering should enable Altice to retain subscribers: they down 158,000 in less than the third quarter and 1.1 million in total since the beginning of the year.
pause for c onsolider
The time seems to consolidation, as suggested Dexter Goei sidelines of the presentation. “ We must realize the closing of the transaction Suddenlink (note: the first US cable operator Altice purchased by 9 billion dollars in May 2015) and the one on Cablevision (note: the second US acquisition for $ 17.7 billion in September) for the second quarter 2016, so I will be surprised if we told something by then . ” It must be said that markets are wary of increasing patrick drahi. After acclaimed magician finance, the action of Altice has fallen 30% since mid-September and Altice today finance at 7.5% interest rate, against 5% at the time redemption of SFR. However, this former investment banker responsible for the telecom industry media at Morgan Stanley does not close the door to “ small acquisitions, perhaps in the media, in the countries where we are already present . ” Such as “ a production company in France “, if that is necessary to produce future original productions of “Zive.”
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