By Mathieu Rosemain
PARIS (Reuters) – French-Israeli billionaire Patrick Drahi told investors he felt “shocked” and “betrayed” by an ongoing corruption probe in Portugal that has shaken his debt-laden telecoms group Altice, raising questions over its governance and internal controls.
The allegations compelled Drahi, the son of two maths teachers who made his fortune through highly leveraged buyouts, to step in on Monday to assuage investors’ concerns over his businesses, whose combined debt is about $60 billion amid rising interest rates.
“This has come as a shock and as a huge disappointment to me,” Drahi said in a call in his first public comments on the probe, which led to his right-hand man and Altice co-founder Armando Pereira being placed under house arrest last month.
“If these allegations are true, I feel betrayed and deceived by a small group of individuals, including one of our oldest colleagues.”
Drahi, who said on Monday that he trusted Altice’s governance and management, added that he wanted to be fully transparent with debt holders, whose support “is not taken for granted.”
Fifteen employees have been put on leave in Portugal, France and the United States since news broke about the probe, which is currently limited to Portugal, said Drahi.
A Portuguese court last month ordered Pereira be placed under house arrest while an investigation into alleged corruption at the group’s local subsidiary is conducted, his lawyer said at the time.
Pereira, regarded as Drahi’s most trusted lieutenant, has denied any wrongdoing.
Altice launched an internal investigation. Portuguese police have said their investigation focused on suspicions that the group’s procurement process was rigged.
Pressed by analysts on the call to lay out the role and extent of Pereira’s involvement within the Altice group, Drahi said Pereira, whom he hired in 2003, had not held any stake in any Altice entity since 2005.
“(He) simply maintained a carried interest of around 20% of my personal economic interest,” Drahi said.
Altice International, the entity that owns telecoms firm PT Portugal, is owned by Drahi’s personal holding Next. The other two entities are Altice USA and Altice France, home to France’s second biggest telecoms firm SFR.
“It is very unpleasant to see the word corruption next to the name of our group and most of the time in press articles next to my name,” Drahi said.
“We acted immediately,” he said, adding that the case would have no impact on cash or liquidity and that the 2023 guidance was unchanged.
Drahi was speaking after Altice International reported second-quarter results, which showed growth in sales, core operating profit and cash flow.
Altice’s bond prices rose 1-4 basis points across its various entities on Monday.
The debt has come under further pressure since Pereira’s July detention, with longer-term debt issued by Altice France trading around 80 cents to the euro while those of Altice France Holding trade around 40 cents to the euro.
(This story has been refiled to fix the spelling of the company to PT Portugal, not PT Portgual in paragraph 12)
(Reporting by Mathieu Rosemain; Additional reporting by Yoruk Bahceli; Writing by Ingrid Melander; Editing by Silvia Aloisi and Conor Humphries)
