Saudi Telecom Co. eyes strategic acquisition of Altice Portugal

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In a surprising turn of events, Saudi Telecom Company (STC) is reportedly exploring the possibility of acquiring Altice Portugal, as revealed by anonymous sources cited in a recent Bloomberg report. The move comes as Altice, owned by billionaire Patrick Drahi, grapples with a staggering debt pile of approximately $60 billion.

Altice’s Portuguese operations, known by the trade name Meo, have emerged as a potential asset for divestiture, providing a means for the company to alleviate its financial burden. Meo currently holds a dominant position in the Portuguese market, boasting a 48% share of the mobile sector.

Sources suggest that this acquisition is the first of three non-binding offers made for Altice Portugal, all purportedly falling below Drahi’s previously reported €7 billion valuation. However, details regarding the other potential suitors remain undisclosed.

The situation is further complicated by the ongoing legal troubles surrounding Altice. The arrest of Armando Pereira, co-founder and former COO of Altice, in July on charges of tax fraud, corruption, and money laundering has cast a shadow over the company. Altice, in response, has emphasized its cooperation with the investigation and the severance of ties with individuals implicated in the case. The scandal undoubtedly poses challenges as Altice seeks to sell its Portuguese branch.

STC, having recently completed the acquisition of a 9.9% stake in Telefónica for €2.1 billion, solidifying its position as the largest shareholder in the Spanish telecom giant, demonstrates a keen interest in expanding its global footprint. The company has been actively pursuing investments in the tech and telecom sectors, not only within Saudi Arabia but also on the international stage. A recent notable transaction includes the acquisition of tower assets from Netherlands-based United Group for €1.22 billion.

The move by STC aligns with a broader trend of Middle Eastern, state-owned telecom companies venturing into major European operators. The United Arab Emirates-based e& has been steadily increasing its stake in Vodafone Group since 2022, with plans to further enhance its equity to 20%.

Meanwhile, Altice has been taking steps to address its financial challenges. Last month, the company announced its intention to sell a controlling 70% stake in its data center business to Morgan Stanley for €535 million, indicating a strategic shift in its portfolio.

As STC navigates the complexities of the potential acquisition and Altice works to stabilize its financial situation, the telecom industry is witnessing a dynamic interplay of global players seeking strategic partnerships in an ever-evolving landscape. The outcome of these negotiations will undoubtedly shape the future trajectory of both STC and Altice in the international telecommunications arena.

(Source: Bloomberg | Total Telecom)

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