Uno scandal has overwhelmed Altice, French telecommunications multinational, active mainly in Belgium, France, Israel, Luxembourg, Portugal and Switzerland, and founded by the French-Israeli billionaire Patrick Drahi.
An investigation has placed him under house arrest in Portugal Armando Pereira, co-founder of the Group, and another businessman, Hernani Vaz Antunes for alleged tax fraud, corruption and money laundering. The investigations are focusing on the possible manipulation of the French group's local procurement processes in Portugal. Pereira, considered Drahi's right-hand man, has denied any wrongdoing. At the moment the investigation is limited only to the Lusitanian country.
The case is erupted in July following a searches in Portuguese offices of its affiliate in the country. The company is working with the authorities to shed light on what happened.
Altice International, the parent company of PT Portugal, is owned by Drahi's personal holding company, Next. Altice USA and Altice France are the other two entities in the group, the latter owning SFR, the second largest telecommunications company in France.
An internal investigation has been launched
As Portuguese police continue their investigation into alleged manipulation of the group's procurement processes, Altice International, the owner entity of PT Portugal, has launched ainternal investigation to shed some light on the situation.
Following news of the investigation, fifteen employees in Portugal, France and the United States were furloughed. There has also been a complete overhaul and tightening of the approval process for all purchasing, payment, PO and related processes.
Drahi: “shocked and betrayed”
Patrick Drahi, stated of feeling “shocked” and “betrayed” from the investigation that overwhelmed the company which also risks having a negative impact on the telecommunications group, already burdened by debts.
The allegations prompted the French billionaire to step in on Monday for allay investor concerns about its companies, whose combined debt totals about $60 billion as interest rates rise.
“It is very unpleasant see the word corruption next to our group name and in most cases in press articles next to my name. L'survey took me by surprise and it deeply disappointed me,” said Drahi – “if these allegations are true, I I feel betrayed and cheated by a small group of individuals, including one of our oldest colleagues” who said he had confidence in the governance and management of Altice, adding he wanted to be fully transparent with debt holders, whose support “should not be taken for granted ”.
Under pressure from analysts, Drahi clarified the role and extent of Armando Pereira's involvement within the Altice group. Drahi said Pereira, who joined Altice in 2003, hadn't owned stakes in any Altice entity since 2005 but "simply retained an interest of about 20% of my personal economic interest."
Drahi said they took immediate action, and assured that the case will have no impact on the company's cash or liquidity. Furthermore, he stated that the forecast for 2023 remains unchanged.
Altice International under pressure
Alice International is famous for its market operations, including the 2014 acquisition of SFR by Drahi, which involved an expenditure of 17 billion euros.
For the second quarter 2023, the Group reported positive financial results with an increase in sales and operating profit. Total revenues were 1.2 billion euros, +4,6% compared to 2022. EBITDA was 456 million euros (+4,3%) and net debt was 8.552 million euros.
After Pereira's arrest in July, however, the Altice's debt has come under further pressure, with long-term bonds issued by Altice France trading at around 80 cents per euro and those of Altice France Holding at around 40 cents per euro (an increase of 1-4 basis points).
The group is committed to transparency throughout the process and will provide any relevant updates to investors. Patrick Drahi and the management team will hold meetings with investors in London and New York in September 2023 to further clarify the situation.
