May 17, 2018 / 7:15 AM / 6 days ago

Altice's French unit shows first signs of recovery in first quarter

PARIS (Reuters) - Altice Europe (ATCA.AS)’s French unit showed the first signs of recovery in the first quarter, the telecoms and cable group said on Thursday, as it hoped to reverse a loss of investors’ confidence that has battered its shares since last year.

The debt-ridden company said its main SFR division, France’s second-biggest telecoms company, added broadband customers for the first time since Altice founder and majority owner Patrick Drahi bought it in 2014.

The signs of an improvement at Altice’s French division enabled the company’s shares, which had slumped 54 percent last year, to rise by around 7 percent on the Amsterdam stock exchange in early session trading.

Revenue in France continued to decrease in the first quarter from a year earlier, but at a slower pace than in the prior quarter.

SFR’s lack of growth despite huge investments in its networks had sparked concerns about Altice’s ability to increase revenue and margins to repay its 50 billion euro debt, hammering shares and prompting the company to split its U.S. and European operations.

“In the first quarter of 2018, Altice Europe has started to deliver on his operational turnaround plan, showing the best subscriber trend Altice has ever reported,” Chief Executive Dexter Goei said in call with reporters.

The French unit added 71,000 fixed subscribers in the first quarter, bringing the total to 6 million. It also added 239,000 mobile customers over the same period, its best quarterly performance on record.

    BROADBAND BATTLE

    SFR’s quarterly revenue decreased on a yearly basis, by 1.1 percent to about 2.6 billion euros ($3.07 billion).

    Growth is expected as the company adds broadband customers, in particular those opting for the more profitable fiber technology, and loses fewer subscribers.

    Altice’s performance in the fixed business contrasted with that of rival Iliad (ILD.PA), whose shares plummeted after admitting it had lost broadband customers for the first time.

    Heavy investments on fixed networks, combined with prolonged heavy promotions by SFR and competitors Iliad, Orange (ORAN.PA) and Bouygues Telecom (BOUY.PA), have led to cut-throat competition in the French telecoms sector.

    “There’s going to be a battle between the four on the market in 2018,” said Xavier Buffon, an analyst at S&P who covers Altice.

    Altice Europe’s total revenues remained flat over the quarter on a constant currency basis at 3.53 billion euros. Core operating profit dipped by 0.5 percent on the same basis to about 1.3 billion euros.

    The sale of assets Altice deems non-essential, such its Dominican Republic unit and French and German towers, will be finalized in the second half, Altice said.

    The group confirmed but adjusted its full-year guidance to reflect the adoption of a new accounting standard. It said its separation with Altice USA (ATUS.N) will be effective early June.

    Reporting by Mathieu Rosemain and Gwenaelle Barzic; Editing by Richard Chang

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