He may have lost out to John Malone in the race for Time Warner Cable Inc., but telecommunications billionaire Patrick Drahi’s foray into the U.S. market is far from over.

After Malone’s Charter Communications Inc. agreed to buy second-largest U.S. cable company Time Warner Cable for about $55 billion, Drahi plans to instead build his U.S. footprint by seeking to acquire smaller cable operators, according to people with knowledge of the matter.

He’s already made his first move. Altice SA, the French-Israeli tycoon’s holding company, agreed to acquire control of Suddenlink Communications on May 20 in a surprise deal worth $9.1 billion. Chief Executive Officer Dexter Goei said during an analyst call to discuss the purchase that everything in the U.S. “below Comcast effectively is in consolidation mode.”

Altice could also pick up any assets that Time Warner Cable and Charter may have to sell to alleviate regulatory concerns, the people said, asking not to be identified as the discussions are private. Altice has said it ultimately aims to have the U.S. contribute to half of the company’s business.

The latest acquisitions by Altice and Charter may spur interest in the next-biggest U.S. cable operators including Cox Communications Inc., which has 4 million video customers, and Cablevision Systems Corp., which has 2.65 million, Bloomberg Intelligence analysts Geetha Ranganathan and Paul Sweeney said Tuesday. MediaCom Communications Corp., WideOpenWest Holding Cos and Cable One Inc have a combined 1.92 million video subscribers, they said.

Altice is following Liberty Global Plc’s model, not only in growing via acquisitions but also by poaching some executives: Gerrit Jan Bakker joined Altice as treasurer this month from Liberty Global, according to his LinkedIn Corp. profile. Altice chief financial officer Dennis Okhuijsen joined from Liberty in 2012.

A spokesman for Altice declined to comment. Charter will pay $195.71 a share for Time Warner Cable -- 14 percent above the New York-based company’s Friday close -- with options of $100 and $115 in cash and the remainder in its own stock. Bright House Networks, a smaller cable company that Charter previously agreed to buy, will also be merged into the combined entity.

Shares of Altice fell 6.6 percent to 122.6 euros Tuesday, the steepest decline since March last year. While Drahi has already shown he’s hungry for U.S. acquisitions, he’s unlikely to enter a bidding war over Time Warner Cable as the Charter offer is seen as too high for Altice to beat, according to two people with knowledge of the matter.

Drahi, 51, who made his move into the U.S. last week by agreeing to acquire control of Suddenlink, also met with Time Warner Cable Chief Executive Officer Rob Marcus, according to a person with knowledge of the matter.

Though Altice had financing from banks lined up for an acquisition of Time Warner Cable, it did not make a formal offer for the company, one of the people said. Trying to beat Charter’s $195.71-a-share offer would require Altice to increase its leverage ratio significantly and carry out a large capital increase to fund the purchase, diluting Drahi’s stake in Altice, two people said.

Altice made the right decision, even though it may have a better regulatory shot at buying Time Warner Cable, ING analyst Emmanuel Carlier said. Altice would control 15 percent of the U.S. broadband market if it bought Time Warner Cable, while Charter would control 20 percent, he said in a note to clients.

“It shows that Altice wants to grow but not at any price, which is a wise thing for Drahi to do,” he added in a phone interview.

Drahi will likely brush off the defeat. While Altice was seriously considering a bid for Time Warner Cable and banks were keen to provide financing, it was not a top priority after the successful Suddenlink deal, two people with knowledge of the matter said.

“There’s still room for more consolidation in the cable industry both in the U.S. and in Europe,” said Yvan Desmedt, a partner at law firm Jones Day in Amsterdam. “What Altice has done over the past few years is quite remarkable, but it’s one thing to move into the U.S. market and a different one to succeed in such a competitive landscape.”

Beyond the U.S., Drahi is likely to continue seeking out European assets to grow his telecommunications and cable empire that already stretches from France, Israel and Portugal to the Caribbean. In Belgium, where Drahi also lost out to Malone last month over Royal KPN NV’s Base unit, the government may sell its stake in Belgacom, while KPN itself may become a target, according to people familiar with the matter.

He may even turn his attention back to Bouygues Telecom, one of the people said. Altice has examined the financial and regulatory obstacles to a transaction with France’s third-largest wireless provider, Bloomberg reported in February.

A Bouygues spokesman declined to comment. He referred to Martin Bouygues’s letter to Investir published over the weekend, in which the CEO of Bouygues SA said he has decided against selling its mobile phone business, and to his comments at the company’s AGM in which he said the unit isn’t for sale.

After last week’s Suddenlink deal, Goei said Altice will be “right in the middle” of the wave of U.S. cable mergers and acquisitions. He also said that the transaction “doesn’t, in any shape or form, affect or impact our European ambitions for continued expansion.”


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