After shopping it around more than a year, Altice USA has found a partner for its Lightpath fiber business that serves the New York metro area. In a deal with an implied enterprise value of $3.2 billion, Altice reached an agreement with Morgan Stanley Infrastructure Partners (MSIP) for the sale of a 49.99% stake in Lightpath.
Last year, Altice USA was in talks with private equity firm Stonepeak Infrastructure Partners for a minority stake in Lightpath, but those negoations never reached fruition.
With the deal, Altice USA scored a large cash infusion while still retaining majority control of Lightpath. Under the terms of the deal, Altice USA said the sale represents a 14.6 times multiple to its 2019 adjusted earnings before interest taxes depreciation and amortization (EBITDA). As part of the deal, Altice USA will receive total gross cash proceeds of $2.3 billion from the sale and related financing activity, which comes to about $1.1 billion after tax and initial debt repayment. Altice said it expects the deal to close in the fourth quarter
With fiber-based connectivity services across various verticals, such as healthcare, education, financial, local exchange carriers and communications providers, Lightpath was a cash cow for Cablevision prior to Altice buying Cablevision four years ago.
“Lightpath is an expansive and best-in-class enterprise fiber communications business with tremendous long-term potential,” said Altice USA CEO Dexter Goei, in a statement. “Bringing in a strategic investor allows Altice USA to focus on operating our core businesses while infusing the capital needed to grow Lightpath and maximize shareholder value.
"We are pleased to partner with MSIP, a leading investor in telecommunications infrastructure with deep operational and management expertise, to propel Lightpath and unlock its future potential.”
It's not the first time that Altice and Morgan Stanley Infrastructure Partners have crossed paths. In April, Altice Europe announced the launch of its new wholesale fiber division, Fastfiber, which is partially owned by Morgan Stanley Infrastructure Partners.
In December, Alice Europe's Portuguese subsidiary MEO inked a deal with Morgan Stanley Infrastructure Partners to build the first nationwide fiber wholesaler in Portugal.