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

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

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

Altice USA’s financial advisers have approached more than a dozen private equity funds in hopes of finding a buyer, said the people, who asked not to be identified because the talks are private. Discussions have not yet taken place with Charter, the second-largest U.S. cable company and a potential suitor given the lack of a geographic footprint in many of the places Suddenlink serves, the people said.

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

The valuation of Comcast and Charter’s traded cable assets have fallen about 25% or more this year as broadband Internet growth has slowed. Altice USA is interested in selling Suddenlink so it can focus on operating 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 on Wednesday that those assets will be “fairly fully fiberized” by the end of 2024.

Altice USA does not have a set target price in mind for Suddenlink, the people said. Discussions about selling Suddenlink are still early and no deal is assured, the people said.

Some infrastructure funds specialize in the transition from cable to fiber, so Suddenlink could be an attractive acquisition for a fund looking to invest in an asset it can sell later.

Blackstone Infrastructure Partners, EQT, and Stonepeak are among the funds that have made acquisitions of cable or optical networks in recent years. Stonepeak paid more than $8 billion of Astound Communications, the sixth largest cable operator in the US, in 2020.

Infrastructure private equity funds are also interested in acquiring WideOpenWest, which offers cable service to areas of the country that already have another cable provider licensed to provide internet, telephone and television services. Bloomberg reported in May that Morgan Stanley’s the infrastructure investment arm was interested in buying the so-called cable superbuilder, which has a market valuation of $1.7 billion.

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

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

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