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Following years of acquisitions, Altice gets in shape for restructure

Following plans to change Altice NV's name to Altice Europe and separate the business from Altice USA Inc., the company reported March 15 its financial results for 2017.

Altice Europe reported consolidated stand-alone revenue of €3.72 billion in the fourth quarter, compared to €3.80 billion in the same period in 2016. Its full-year 2017 consolidated stand-alone revenue was €14.72 billion, compared to €14.78 billion in 2016.

The results were based on the presumption that the planned spinoff occurred in January 2016 and excludes Belgium and Luxembourg, Altice USA, as well as Altice NV's international wholesale voice business and green.ch AG and Green Datacenter AG in Switzerland, which are noncore assets that the company plans to divest.

As announced in January, Altice NV will arrange the separation of Altice USA through a spinoff of its 67.2% interest in the U.S. business through a distribution in kind to Altice NV shareholders.

The slit follows years of acquisitions. In 2015, Altice bought a 20% stake in SFR Group SA, then Numericable–SFR, followed by the purchase of Portugese assets of PT Portugal and the acquisition of a 70% stake in Suddenlink Communications.

In 2016, Altice made a move for Cablevision Systems Corp. A year later, it fully acquired online video advertising marketplace Teads and bought the remaining 4.1% stake in SFR Group that it did not own. The company also entered into a deal to buy Portuguese media group Media Capital.

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When the actual separation takes effect, Altice founder Patrick Drahi will serve as president of the board of Altice Europe and chairman of the board of Altice USA.

Armando Pereira will become COO of Altice Europe and serve as strategic adviser to Altice USA for all operations. Dennis Okhuijsen will serve as CEO of Altice Europe, with all corporate functions and country managers reporting to him, while he will report to Drahi. Dexter Goei will remain CEO of Altice USA, reporting to Drahi.

Altice Europe also disclosed post-split operating free cash flow guidance of €2.4 billion to €2.6 billion for the full year 2018, excluding the Altice TV segment.

Without considering the planned split, Altice NV reported consolidated stand-alone revenue of €5.82 billion for the fourth quarter of 2017, compared to €6.06 billion in the year-ago period. The Netherlands-based company's year-on-year revenue grew by 0.6% and its adjusted EBITDA margin increased by 2.1 percentage points year on year to 40.1% in 2017.

Altice's operating free cash flow increased by 13.4% on a constant-currency basis for the full year 2017. The company also said that its roughly €4 billion of network and new services total capital expenditures in 2017 were in line with its guidance.

Altice USA Inc. reported on Feb. 27 fourth-quarter 2017 net income attributable to company stockholders of $2.25 billion, or $3.06 per share, up from an attributable net loss of $236.7 million, or a loss of 36 cents per share, in the year-ago period.

Altice said that following the enactment of the U.S. Tax Cuts & Jobs Act at the end of 2017, the company recorded a noncash deferred tax benefit of $2.34 billion in the fourth quarter of 2017 to adjust the net deferred tax liability for the reduction in the U.S. corporate federal income tax rate from 35% to 21%.

During Altice USA's earnings call the same day, CFO Charles Stewart said the company expects total revenue growth of about 2.5% to 3% in 2018 as compared to 2017, when the company recorded full-year revenue of $9.33 billion. But Stewart noted that this growth "is likely to be more second-half weighted."