By Pamela Barbaglia, Andrés González and Gwénaëlle Barzic
LONDON/PARIS (Reuters) - Debt-burdened telecom carrier Altice Europe is gearing up to sell a stake in its high-speed fiber network business in Portugal, sources familiar with the matter told Reuters, with an auction process expected to kick off within a fortnight.
Altice, which took control of Portugal Telecom in 2015, is looking to replicate its recent sale of a 49.99 percent stake in French fiber optic business SFR FTTH to three investment funds for 1.8 billion euros.
The group, whose founder is billionaire Patrick Drahi, has hired Lazard to sound out potential bidders including U.S. funds KKR and Morgan Stanley (NYSE:MS) Infrastructure Partners, the three sources said.
Information packages on the Portuguese network are expected to be dispatched in the next couple of weeks detailing how Altice will split costs and margins between its telecom services division and cable network in Portugal, the sources said.
Morgan Stanley's infrastructure arm bought 75 percent of Altice's Portuguese towers business last year in tandem with Horizon Equity Partners and it is seen as a strong contender in the upcoming sale, the sources said, cautioning that no deal was certain.
Other possible bidders include investment funds Ardian, Macquarie Group and I Squared Capital which tried to buy a stake in Altice's French cable unit last year but lost to a consortium of Allianz (DE:ALVG) Capital Partners, AXA Investment Managers and OMERS Infrastructure.
A spokesman for Altice Portugal was not immediately available for comment while Lazard, Morgan Stanley Infrastructure Partners and Ardian declined to comment. Macquarie and I Squared Capital did not immediately respond to requests for comment.
Altice is restructuring to revive its fortunes after growing rapidly in recent years through a series of acquisitions.
It June it raised about 2.5 billion euros ($2.86 billion)from selling stakes in its telecoms towers businesses in France and Portugal.
It also pursued a spin-off of its American unit, Altice USA, letting Patrick Drahi maintain control of the European and U.S. operations while he sees through a turnaround in Europe.
Drahi needs to regain market confidence after a steep fall in Altice's share price heightened concerns about its ability to repay its 30 billion euros of debt.
But he also needs to shore up Altice's cash reserves to take part in France's 5G telecoms frequencies auction which is expected to start in the autumn, with licenses likely to be awarded at the start of 2020.
France's four main telecoms operators Orange, Bouygues (PA:BOUY) Telecom, Altice Europe's SFR and Iliad regularly compete in costly spectrum auctions, which allow wireless carriers to develop networks.