Fresh off its 70 percent acquisition of cable company Suddenlink Communications, French telecom firm Altice may already be looking at its next U.S. target: Verizon Communications' (NYSE: VZ) residential wireline business, including FiOS TV.
According to a Citigroup research report from analyst Michael Rollins, and cited by Investor's Business Daily, Altice could snap up Verizon's wireline assets to further expand its U.S. presence instead of buying another cable firm, like Cablevision Systems (NYSE: CVC), which has seen its stock rise on speculation that it's an acquisition target for Altice. Rollins said he believes Verizon's wireline business could be purchased by Altice for about $34 billion.
"While press reports suggests many in the market believe Cablevision is Altice's next acquisition, we believe an acquisition of Verizon's local wireline operation (excluding the enterprise and smaller strategic business units) is more likely," said Rollins in the report as cited by Investor's Business Daily.
Verizon, for its part, seems amenable to selling its wireline assets. In February the telco sold some wireline assets in California, Florida and Texas to Frontier Communications for $10.54 billion in cash. According to the Citibank report, a sale of Verizon's remaining local operations could increase the company's ability to purchase more spectrum and pursue its emerging wireless, over-the-top video strategy that it has been touting lately. Last month Verizon agreed to buy AOL for $4.4 billion to further its mobile video strategy.
Altice's reported interest in Verizon is just the latest in a long list of analyst speculation that has been circulating ever since Charter Communications (NASDAQ: CHTR) announced its proposed $56.7 billion takeover of Time Warner Cable (NYSE: TWC) last month.
Last week Macquarie Capital's Kevin Smithen said that he thought Altice might be looking at Cablevision or privately-held Cox or Mediacom, in an effort to gain more fixed-line scale in order to compete against Charter (NASDAQ: CHTR) and Comcast (NASDAQ: CMCSA).
- see this Investor's Business Daily article
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