Company Trend Analysis - Privacy Regulation To Impede Altice's Advertising Plan - MAY 2017

BMI View: Altice acquiring Teads will see the operator adding advertising to its convergence strategy. It will be more difficult to implement in Europe than in the US, because of personal data and privacy regulations. We also envision that some operators might look to split their service plans to offer privacy and non-privacy tariffs.

Altice has acquired Teads, an online advertising marketplace, in a deal worth EUR285mn (USD307mn). The deal is expected to close before the end of 2017. With the move, Altice adds advertising to its convergence strategy, which had focused on networks and content, on both fixed and mobile platforms (see ' Altice: France Core To Overall Performance ' , see March 9 2017). This follows the strategies of rival operators such as Verizon and Telenor, which have embarked on similar strategies using advertising (see ' Verizon/Yahoo One Strategy For Monetisation ' July 27 2016, ' Verizon: 5G, IoT And Digital Content Drive Strategy ' August 3 2016 & ' Telenor Follows Verizon's Footsteps ' , August 23 2016). The main worry for Altice will be regulation, and whether data protection rules will allow the company to fully implement that side of its strategy.

Teads is a specialist in video advertising, and Altice will look to add these capabilities to provide targeted and personalised advertising in its networks to its subscribers, as well as competing with global giants such as Google and Facebook. This would provide a new diversified revenue stream for the operator, as it holds a trove of personal data which can be used to that effect. However, we believe there is a difference between the "free" services offered by online players, where their subsequent use of personal data for advertising purposes is seen as part of the deal, and the same use by operators, as they already have a fiduciary relationship with their clients providing their services. The type of personalised advertising discussed by Altice is currently forbidden in France, and the regulatory framework in Europe is only moving towards greater consumer protection, especially in relation to consent, in both the General Data Protection Regulation (GDPR) and the proposed e-privacy directive (see ' GDPR: Key Points And Impact On Industries ' , January 6 2017 & ' Data Protection Could Be Weakened By Competing Regulation ' , January 11 2017).

Looking For New Revenue Streams
Altice Revenues (EURbn), 2015-2016
Source: Altice, BMI

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