Altice USA Confirms Asset Sales Talks as Fiber Construction Ramps Up During Q2

Altice USA reported another difficult quarter, but confirmed that its has entered discussions to sell off all or part of the former Suddenlink territory, which accounts for about 30% of revenue. At the same time, the firm continues to move forward with its fiber network buildout, covering nearly 30% of its non-Suddenlink territory. Management indicated that the rationale for an asset sale could include a longer time horizon, a lower cost of capital, or more patience among private investors than the public markets have afforded Altice. Given our view that cable stock valuations are unreasonably low currently, we agree with this sentiment, though private or strategic buyers undoubtedly would also like to take advantage of those valuations. However, a sale could allow Altice USA to significantly reduce balance sheet risk. We’re leaving our fair value estimate at $28 for now.