French-Israeli billionaire Patrick Drahi says a corruption probe into executives central to his telecommunications empire Altice is having “no impact whatsoever” on the company’s operations.
(Bloomberg) — French-Israeli billionaire Patrick Drahi says a corruption probe into executives central to his telecommunications empire Altice is having “no impact whatsoever” on the company’s operations.
Meanwhile, Altice USA has frozen some capital spending as it reviews its supplier relationships. The broader Altice group is conducting internal audits around the world, looking into procurement practices. More than a dozen employees have been suspended in relation to the allegations of corruption, money laundering and tax fraud. And according to people familiar with the situation, Altice’s supply chain has been thrown into a state of upheaval.
Also standing in stark contrast to Drahi’s comments: Concern over the fallout of the probe has seen Altice bonds fall deeper into distressed territory. Some had been trading at below 50% of face value, raising questions over how companies in the group will address a more than $60 billion debt pile. Altice France’s executives said on a call Tuesday that they are looking at options to cut debt, ranging from asset sales to an equity injection from Drahi.
Altice had hoped to sell its data center portfolio in France by the end of the summer — but the process has been extended due to the Portuguese probe, the company said.
Even still, Drahi said on the call with Altice France’s debt investors that the company’s “brand loyalty and reputation is not affected and there has been no impact whatsoever in our businesses so far.” He went as far as to note that the only impact will be “a positive one of saving money by buying direct in some cases,” referring to how the company had severed ties with suppliers connected to the allegations.
A three-year investigation led to 90 searches of homes and offices and several arrests, including Drahi’s right-hand man Armando Pereira, who remains under house arrest in Portugal. He has denied the Portuguese prosecutor’s allegations via his lawyer.
Read more: The Corruption Probe Rocking Altice Tycoon’s Empire: QuickTake
This week, during calls with debt investors, Drahi shed some light on the role that Pereira, currently under house arrest in relation to a Portuguese corruption investigation, played at his telecommunications empire.
Drahi said he appointed Pereira as an adviser to Mathieu Cocq, chief executive officer of Altice France’s mobile network SFR, when Cocq took the role in August 2022. The advisory role was terminated in July of this year, “independently of recent unforeseeable events,” he said during a call with Altice France debt investors on Tuesday.
The appointment underscores Pereira’s influence on the company, despite not holding an executive role at Altice group in recent years. Pereira worked side-by-side with Drahi for two decades, and held roles where he was responsible for technical operations including procurement.
Drahi’s comments follow a debt investor call for Altice International, which includes the Portuguese unit, on Monday, where he said he felt “betrayed and deceived by a small group of individuals, including one of our oldest colleagues,” being investigated as part of the corruption probe. During the call, Drahi distanced himself from Pereira, emphasizing that he held no direct shares in Altice entities, although had made a small investment of less than 1% of the equity in Altice’s first acquisition.
“Over time, the form of his economic interest evolved, and since 2005 he did not own a single share or right in any of the Altice entities but simply maintained a carried interest of around 20% of my personal economic interest,” Drahi said.
When later asked about the 20% carried interest, Drahi said it was a “personal issue” that had “no impact on Altice International.”
Altice says that it’s a victim of the alleged wrongdoings and has opened its own internal audits in every region in which it operates. It is also conducting a “full review and thorough reinforcement of the approval process on all procurement, payments, purchase orders and related processes,” the company said Monday.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.