July 31, 2019 / 7:07 PM / 7 months ago

UPDATE 1-Altice Europe lifts targets after swinging back to growth in France

* Altice France Q2 revenue up 4%

* Operating profits jump

* Raises full-year targets (Adds details, background)

By Mathieu Rosemain and Gwénaëlle Barzic

PARIS, July 31 (Reuters) - Cable and telecoms group Altice Europe lifted its full-year targets on Wednesday after its French division swung back to growth in the second quarter, signalling that a turnaround was underway in its main market.

The group’s founder and majority-owner Patrick Drahi, on a quest to reassure investors about the company’s capacity to repay a hefty 30.1 billion-euro debt ($33.50 billion), hailed the performance as proof that his strategic shift from cost-cutting towards gaining clients and selling assets was working.

“All our companies grew — France, Portugal, International — and this growth is accelerating quarter after quarter,” the Franco-Israeli billionaire told analysts on a call.

Altice Europe’s French division SFR, which accounts for more than 70% of its activity, grew by 4% compared with a year earlier and added customers for both its fixed and mobile businesses.

It is the first time since 2010 that SFR, France’s second-biggest telecoms group after former monopoly Orange , managed to grow revenue out of sales to individual customers, the company said.

Drahi took over SFR in 2014 in a debt-fuelled deal.


SFR’s previous inability to generate growth in a cut-throat competitive environment in France sent Altice Europe’s shares down by 60% in late 2018 and prompted Drahi to oust the then CEO and take back the front seat.

The group has since then vowed to regain market share from rivals Iliad, Bouygues Telecom and Orange by investing heavily in infrastructure and customer service.

It also sought to appease investors by selling some of its assets, including minority stakes in its fibre optic businesses in France and Portugal.

Drahi confirmed that talks with potential investors were also going on over the group’s online advertising marketplace Teads and Portugal Telecom.

But given Altice Europe’s quarterly performance, senior advisor and former CFO Dennis Okhuijsen added that the company was in “no rush” to sell these assets.

Altice Europe’s group revenue was up 3.3% on a constant currency basis to 3.59 billion euros in the second quarter, while core operating profit jumped 9.3% to 1.43 billion.

As a consequence, the group now sees operating free cash flow growing by around 15% in 2019, compared with about 10% previously. It also sees a gain in its French unit’s sales of between 5% and 6%, compared with 3 to 5% previously.

$1 = 0.8985 euros Reporting by Mathieu Rosemain and Gwenaelle Barzic; editing by Michel Rose and Kirsten Donovan

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