Altice is rumored to shop Suddenlink, but who would buy it?

Altice USA is exploring the sale of Suddenlink, according to unnamed sources of Bloomberg. The news outlet said Suddenlink could fetch as much as $20 billion.

Altice has seemed a bit ambivalent about Suddenlink of late. In April it sent an open letter to Suddenlink customers indicating the name would be switched to the Optimum brand by the end of the year.

But at the MoffettNathanson Media & Communications Summit in May, Altice USA CEO Dexter Goei indicated that Suddenlink’s rural footprint wasn’t the best fit for Altice.

“Strategically, it's not a footprint that makes you sit there and say ‘Wow, that’s the most strategic footprint out there,’” said Goei. “So, are we sellers or restructurers of certain of our assets in other areas outside of Cablevision? We're always open to listening to people out there if it makes sense for us to trade, swap, sell certain assets.”

Suddenlink, which was purchased by Altice in 2015 for $9.1 billion, provides cable and internet service in the south-central U.S. After Bloomberg’s story yesterday, Altice USA’s stock has risen from $9.18 to $11.39.

Potential buyers

The analysts at MoffettNathanson said today that they’re skeptical about either Charter or Comcast as potential suitors. They said other cable operators, most notably privately-held Cox Communications, couldn’t be ruled out.

“For Cable One, on the other hand, the acquisition of a company the size of Suddenlink would be transformative, in our view," wrote Moffett. “They have made no secret of their desire to get bigger and, other than privately-held Mediacom, there is no other meaningfully-sized cable operator in the country that might reasonable be acquirable.”

But if no cable operators are interested in Suddenlink, “that leaves private equity,” wrote Moffett. “Fortunately for Altice, we think there does appear to be a rather robust appetite for broadband investments of all kinds.”

Will a deal pass antitrust muster?

New Street Research’s policy analyst Blair Levin said, “There are some who believe that the current leadership of the antitrust authorities want to block all deals. We think that is inaccurate. Further, we think the political context 6-12 months from now, when the decision is likely to be made, may be easier for a deal involving Suddenlink to obtain approval.”

Levin predicts that if Republicans gain control of the House, antitrust authorities will be more reluctant to expend resources investigating and potentially challenging transactions that won’t have big impacts on competition. Antitrust authorities are already complaining they need more resources to handle their existing caseloads.