“Telecoms is like pinball: as long as there are balls, I’m still playing. » This June 24, 2015, during a dinner of the Foundation of the Polytechnic School, from which he graduated, Patrick Drahi boasts. Even if, the day before, Martin Bouygues refused to sell his operator Bouygues Telecom, everything seems to be succeeding for the one who has just paid 13.5 billion euros in October 2014 to buy SFR from Vivendi. Starting in 1994 from a small cable operator in Cavaillon (Vaucluse), the businessman built an empire in telecommunications which he later extended into the media and art.
Eight years after this dinner, does Patrick Drahi come close to game over ? The arrest, on July 13, in Portugal, of his historic associate, Armando Pereira, for alleged acts of corruption and tax evasion, revealed the fragilities of his group, weighed down by nearly 60 billion euros of accumulated debt. after a decade of frantic acquisitions (SFR, Portugal Telecom, Cablevision, Suddenlink, Sotheby’s). Or approximately six times the gross operating profit generated in 2022 by its four major silos (Altice France, Altice International, Altice USA and Sotheby’s).
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Buy a company on credit, then another, larger and still on credit, and yet another… In times of low or even negative interest rates, as was the case during the 2010s, the audacious technique worked. . But with the recent surge in the cost of money (the main rate of the European Central Bank went from 0% in July 2022 to 4% in September 2023), the building is teetering. In this type of scheme, usual for companies, the debt is never repaid: it is refinanced, that is to say that a new credit replaces a previous one when it matures. But if rates are raised, the new financial charges are logically greater than the previous ones. However, will Patrick Drahi’s companies, in particular the largest of them, SFR, have the means to cope with higher drafts?
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From buyer to seller
The equation becomes even more complex with the arrest of Mr. Pereira. In the case, Altice poses as a victim, as the Portuguese prosecutor wrote in his indictment. But wouldn’t a possible conviction of Mr. Pereira risk harming the group’s reputation with its donors? This September 28, Altice International, the holding company which notably owns telecoms assets in Portugal, announced that it wanted to raise 500 million euros on the markets. A strong test which will allow us to see the rate at which investors are ready to lend money to Patrick Drahi. The result will be known after October 2.
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