EMEA: Altice sells towers for 18x EBITDA

20 June 2018 - 12:00 am UTC

Altice is to sell equity stakes in its French and Portuguese towers for a combined EUR 2.5bn in cash following a heavily contested process involving infrastructure funds and strategics.

In France, the Netherlands-listed telecom operator has entered into an exclusivity agreement with KKR Infrastructure to sell a 49.99% equity stake in a new company, SFR TowerCo, which will own 10,198 sites. Altice will retain the majority stake.

The transaction gives SFR TowerCo an enterprise value of EUR 3.6bn, or a multiple of 18.0x 2017 pro forma EBITDA of EUR 200m, Altice said in a statement on Wednesday (20 June). 

SFR, Altice’s French mobile operator, and KKR would partner to operate and develop what Altice described as the country’s largest independent towerco. Until now, TDF, which is owned by PSP Investments, Arcus Infrastructure and Brookfield, has been the market leader.

Under the deal, SFR TowerCo would sign a 20-year master agreement with SFR as its anchor tenant. The business model of independent towercos is to lease towers to additional tenants. 

The transaction, which will be subject to regulatory approvals, is expected to reach financial close in 4Q18. 

The winner of the Portuguese process, a smaller deal involving a 75% stake, is a consortium that includes Morgan Stanley Infrastructure Partners and Horizon Equity Partners. They will become shareholders in a new company, Towers of Portugal (ToP), which comprises the 2,961 sites currently operated by Altice Portugal. 

PT Portugal, Altice’s local unit, will “reinvest to hold a 25% financial stake in ToP alongside the consortium”, according to the Altice statement. Meo is the mobile brand of PT Telecom, which has since rebranded as Altice Portugal.

The transaction gives ToP an enterprise value of EUR 660m, and a multiple of 18.9x 2017 pro forma EBITDA of EUR 35m. 

ToP will become Portugal’s first independent towerco, and sign a 20-year master agreement with MEO as anchor tenant. 

The transaction is expected to close in 3Q18. 

Netherlands-listed Altice Europe was advised by JP Morgan and Lazard (financial) as well as Franklin, Vieira de Almeida, Mayer Brown and Ropes & Gray (legal).