NEW YORK (Reuters) – Cable operator Altice USA Inc is exploring options for its Lightpath fiber unit, including a divestment of the seller of Internet services to large corporations that could fetch $3 billion, according to sources familiar with the matter.
New York-based Altice USA has hired investment bank Goldman Sachs to assist in the process, the sources said, asking not to be named because the matter is private. The discussions are still early and Altice is also considering bringing on an investor in Lightpath without disposing of it entirely, the sources added. Representatives for Altice USA and Goldman Sachs declined to comment.
Lightpath generates more $200 million per year in earnings before interest, taxes, depreciation and amortization (EBITDA), one of the sources said, and could be valued at roughly $3 billion in a potential sale. Altice USA has a market capitalization of $15.37 billion.
Altice USA Chief Executive Dexter Goei called the unit “non-strategic” at an investor conference last December, and said it “may be better in the hands of a third party or at least partnered up with someone.” Altice USA’s core business is selling broadband, TV and voice services to consumers.
The potential deal is in line with recent moves made by other companies owned by Altice USA’s majority shareholder, Franco-Israeli billionaire Patrick Drahi. Drahi’s sprawling global media and telecom empire, which was built on cheap credit over the last decade, has been shedding assets around the world to address investor concerns over its debt load.
Altice Europe, an Amsterdam-listed telecom conglomerate, sold a 49.99 percent stake in its fiber optic business last November to a group of investment firms for 1.8 billion euros ($2.05 billion). It also raised 4 billion euros in cash through sales of stakes in its towers businesses in France and Portugal last year.
Altice USA is looking to capitalize on the increasing demand for acquisitions of digital assets by wireless tower operators, infrastructure funds and private equity firms.
The company’s annual report showed its fiber network covers 10,100 buildings in the New York City area.
“Lightpath’s network is expansive, diverse, has untapped
potential, and its dominant Long Island, New York presence could make it an attractive play for a strategic, financial sponsor, or infrastructure fund,” Cowen research analysts said in a note last month.
Another wireless infrastructure company, Zayo Group Holdings Inc, said earlier this week it was evaluating strategic options. Reuters has previously reported buyout firms have been interested in acquiring Zayo.
Reporting by Liana B. Baker in New York; Editing by Steve Orlofsky