Altice has pressed vendors hard as part of its wider cost cutting at France’s Numericable-SFR, however such an approach carries a downside.
According to Financial Times, shortly after its purchase last year, France’s second largest operator issued an ultimatum to suppliers: halve your prices or else.
SFR suspended payments to vendors including to 20 members of Syntec Numerique, which represents companies in the digital sector.
Altice deployed the same cost-cutting model in its other debt-fuelled acquisitions that has seen it develop into one of Europe’s leading telecoms group.
“The attitude was ‘Prove that I need you’,” said Mathieu Coulaud, a lawyer with Syntec Numerique. As Coulaud pointed out, such an approach is not typical of French business culture.
However, aggressive cost-cutting is not without side-effects, particularly in brand reputation. The French Association of Telecom Users found that complaints among SFR subscribers increased markedly between 2014 and 2015.
During its most quarterly figures (Q3 2015), SFR Numericable lost 158,000 subscribers. It has a total of 15.1 million subscribers. The company will report full year 2015 results tomorrow (15 March).
In a revealing quote, an executive with Vivendi, SFR’s former owner, said; “if Drahi had a different style of management, we would have kept the 20 per cent stake in SFR.”
“But he had a very bad press as a result of his management style. We didn’t want to associated with any of that,” the insider added.
As part of the sale, Vivendi maintained a 20-per-cent stake in SFR but chose to dispose of it rapidly after the deal closed.