For the second time in two days, Patrick Drahi, the founder and controlling shareholder of Altice, took the floor on Tuesday, August 8, at a conference with investors. He sought to reassure them about the consequences of the arrest of his associate Armando Pereira in Portugal in connection with alleged corruption.
Drahi said Pereira's executive functions in the telecoms and media company were limited. The latter was only CEO of Altice France (SFR, BFM-TV) in 2018 and at that time played "a key role in relaunching the group's activities and building our operator in fiber optics XpFibre," the current CEO explained. And while he advised Mathieu Cocq, SFR's CEO, after he took over in August 2022, Mr. Pereira saw his mission in this transition phase come to an end as planned at the end of July.
As for the 10 SFR subcontractors implicated in the Portuguese judicial investigation, they represent only 2% of Altice France's total purchasing volume. If they were found to have inflated their prices to the detriment of SFR and to the benefit of Pereira's relatives as the Portuguese courts suspect, the potential damage to the operator would be just 0.5% of total purchases, Drahi added. The pragmatic executive even saw an advantage in the affair: the disputed contracts, almost all of which have already been terminated, will be taken over by other subcontractors under better pricing conditions, which will reduce Altice France's procurement costs.
While he sees the bright side, Drahi knows that the Portuguese case makes his company's financial situation even more acrobatic. With 23.8 billion euros in net debt at the end of June 2023, 500 million more than three months earlier, Altice France cannot afford to lose the confidence of its creditors. Nor can the telecoms and media group see its business deteriorate if it is to continue repaying its debt. "My number-one priority is to get SFR out of debt," the group's founder told investors, reassuring them of his "total commitment."
Debt reduction will be achieved through asset disposals. Initiated at the beginning of the year, the sale of SFR's data centers was due to be completed this summer but the Portuguese situation slowed the process by "a few weeks," as Malo Corbin, Altice's CFO, admitted on August 8. Other financial operations are not excluded, notably with the capital of XpFibre, to relieve the balance sheet. The group did not give the names of the other assets that could be sold, although rumors of a sale of BFM-TV have been circulating for several weeks.
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