Altice (SFR) France - comment

With summer underway, speculation has resumed. This morning’s press article references potential interest from Blackstone in a joint bid for SFR, citing an internal valuation of up to €30 billion. 

The figure warrants a reality check. SFR’s net debt prior to any write-offs stands at approximately €21 billion, and is expected to decrease to around €15.5 billion following the restructuring. If a €30 billion valuation were truly attainable, it is unlikely Drahi would have pursued a debt-for-equity swap; under such a scenario, his equity stake alone would be worth roughly €9 billion. A sale at this stage implies an equity value of approximately €14.5 billion, which would be split between bondholders and Drahi, original shareholders retaining only 55% of the restructured equity. While we do not rule out a potential sale of SFR, the valuations currently cited in the media appear significantly overstated.