Early this morning, Altice (ATUS), the country's fourth largest cable provider, priced its up-sized 63.9 million share IPO at $30, which is towards the high end of the $27-$31 expected range. In all, the IPO generated $1.9 billion in gross proceeds, making it the second largest IPO of 2017, trailing only Snap (SNAP). However, it's important to note that most of the proceeds from the IPO are going to selling shareholders, not the company itself.
On that topic, after the close last night, ATUS increased the IPO size to 63.9 million from 46.6 million. However, the increase was solely due to shareholders looking to sell more shares. Specifically, selling shareholders sold 51.87 million shares, up from 34.48 million, while ATUS sold 12.07 million.
ATUS is one of the largest cable, broadband communications, and video service providers in the U.S. More specifically, the company provides broadband, pay TV, phone services, Wi-Fi hotspot access, proprietary content, and advertising services to about 4.9 million residential and business customers. The company -- which is actually holding company -- was formed when it acq uired Cequel Corporation (Suddenlink) on December 31, 2015 and then Cablevision Systems on June 21, 2016.
ATUS' parent company is Nethlands-based Altice N.V, a multi-national cable, fiber, telecommunications, content, media, and advertising company. In 2015, Altice N.V made the decision to enter the U.S market, which is the largest broadband communications and video services market in the world.
This entrance into the U.S market includes the integration of the operations at Operations of Suddenlink and Cablevision, as well as centralizing its business functions, reorganizing procurement processes, terminating lower-return projects, and investing in its employee relations. These efforts have led to improved operational efficiency, allowing it to redeploy physical, technical, and financial resources towards upgrading its network and improving its customer experience.
More specifically, ATUS has expanded its 1 Gpbs broadband service to about 60% of its footprint, compared to about 40% pror to the Suddenlink acquisition. Also, it has began a five year plan to build a FTTH network which will enable it to deliver more than 10 Gbps broadband speed across its entire footprint. And lastly, the company is planning to launch a new home communications hub during 2Q17. The company says it will be an integrated platform with a dynamic user interface, combining a set-top box, and an internet router and cable modem in one device.
For the 3 months ended March 31, 2017, ATUS generated $2.3 billion in revenue, which was up 1% year/year. ARPU improved to $139.11 from 135.32 in the year ago period. Also, Adjusted EBITDA was $941.7 million, for a margin of 40.8%.
The main downside to ATUS' financials is its debt-heavy balance sheet. As of March 31, the company had long term debt of $24.1 billion and cash and equivalents of $463.9 million. It does plan to use the proceeds from this offering to pay down some of its debt, but, that will only make a small dent in the total.
Lastly, ATUS plans to retain all of its future earnings to fund the expansion of its business, so, it will not be paying a dividend at this time.
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