* Price reflects 7 to 8 times asset’s yearly op. profit
* Sale aimed at reducing group debt
* Credit rating firm S&P changes its outlook to negative
By Sophie Sassard and Mathieu Rosemain
LONDON/PARIS, Nov 23 (Reuters) - Telecoms and cable group Altice hopes to raise as much as 3 billion euros ($3.5 billion) from the sale of its Dominican Republic business as it seeks to reduce debt and improve its performance, two sources close to the matter said on Thursday.
Altice’s share price has halved since it reported disappointing quarterly results in France earlier this month amid a fiercely competitive market. The group is carrying a hefty 50 billion-euro ($59 billion) debt.
Patrick Drahi, the founder and majority owner of Altice fired chief executive Michel Combes and pledged last week the group would shift away from acquisitions towards reducing debt.
This week, Altice said it had identified assets that could be sold, including its portfolio of telecoms towers, and that sales could start as early as the first half of 2018.
Altice’s Dominican Republic telecoms business generated 718 million euros in revenue last year, or 3 percent of the group’s total. The price tag represents a multiple of seven to eight times the adjusted annual earnings before interest, taxes, depreciation and amortisation (EBITDA), the sources said.
The group’s shares rose after the Financial Times reported a potential sale of the asset earlier on Thursday. They closed up 3.85 percent at 7.85 euros.
Amsterdam-based Altice denied rumours last week that the group might sell shares to raise cash.
Instead, sales of non-core assets in Europe, such as some of its telecoms towers, could yield up to 4 billion euros, a senior banker familiar with the situation said at the time.
The banker also said that management had yet to decide whether to sell towers country by country or bundle them into a company and float it while retaining a majority stake.
The sale of the Dominican Republic business alone might not be sufficient to alleviate concerns raised by credit rating agency S&P Global Ratings, which changed its outlook on Altice’s debt to negative from stable on Thursday.
Altice was given a B+ long-term credit rating by S&P, which is four notches below investment grade.
“The negative outlook reflects various execution risks that could prevent the group from sustaining its market positions in the core French market, reducing debt, and restoring market confidence,” S&P said in a statement.
“We could lower the rating by one notch in the next year if management fails to restore sounder operations in France, such as achieving better customer retention and reducing turnover in senior management, or if it fails to trim absolute debt (...),” it added.
$1 = 0.8445 euros Additional reporting by Gwenaelle Barzic in Paris; Editing by Elaine Hardcastle