* Shares had slumped last year on concerns over debts
* Moved aimed at simplifying business structure (Adds share price reaction, analyst comment)
By Leigh Thomas and Anjali Athavaley
PARIS/NEW YORK, Jan 9 (Reuters) - Telecoms and cable group Altice NV is separating its U.S. and European operations to try to reassure investors alarmed by its high debt and low revenue generation, especially in its core French telecoms business.
Altice said it would spin off its U.S. arm to existing investors and prioritise a turnaround of its European operations. Both companies will have new management.
Altice's battered shares -- down about 50 percent over the past year -- rose 6.6 percent in Europe on Tuesday, boosted by hopes the breakup could open the door to a wider reorganisation and possibly allow it to offload problematic assets.
The U.S. business, no longer owned by Altice NV, would be shielded from concerns about the European operation, while a parting $1.5 billion dividend payment will improve the balance sheet of the European arm.
"Altice USA's shares have suffered from guilt by association with the weaker results at the European parent," said Craig Moffett, an analyst at MoffettNathansonMoffett.
"The biggest overhang on Altice USA shares," he added in an email, "has been the nagging concern that U.S. shareholders might somehow be called upon to backstop weakness in Europe. That risk will now be gone."
Altice's performance in Europe last year led investors to question its strategy, and in November founder Patrick Drahi returned as president while Chief Executive Michel Combes resigned.
Altice NV, which is based in the Netherlands and will be renamed Altice Europe, aims to complete the spinoff of its 67.2 percent interest in Altice USA by the end of the second quarter, following regulatory and shareholder approvals.
Turning around operations in France and Portugal are the top goals for the European business.
Altice NV's stock is down by about half over the last 12 months, while shares in the U.S. unit are down about 35 percent from their market debut last June.
Altice has grown in the United States and Europe through debt-fuelled acquisitions, raising its net debt to more than five times its annual core operating profit.
Drahi in a statement also said that there was a path to further strengthen the European balance sheet over the long term through non-core asset disposals.
Analysts at brokerage Raymond James said Altice's European arm could become an acquisition target for rival French telecoms companies.
"A separate listing of Altice Europe makes a sale of this asset easier, to Bouygues or Iliad for instance, which could both consider market consolidation synergies in France, in our view," Raymond James wrote in a research note.
"However, we doubt that the intention to sell is unlikely to be reached in the medium-term, as this would require a material discount to the price paid for these assets," it added.
The two companies will be led by separate management teams with Drahi retaining control of both companies.
Dennis Okhuijsen will become CEO of Altice Europe and Dexter Goei will continue to serve as chief executive of Altice USA.
Franco-Israeli tycoon Drahi will own 52 percent of the European business and 43 percent of the U.S. business.
The dividend to be paid to Altice Europe will add to Altice USA's net debt, which was approximately $21.2 billion at the end of the third quarter of last year. Altice USA also approved a $2 billion repurchase program of U.S. shares, once the separation is complete.
The U.S. dividend will provide an approximately 900 million euro cash injection to the European operation. (Additional reporting by Sonam Rai and Supantha Mukherjee in Bengaluru; Additional reporting by Sudip Kar-Gupta in Paris; Editing by Clive McKeef and Keith Weir)