Altice Mobile is ready to ramp up its MVNO biz

Altice Mobile is the mobile virtual network operator (MVNO) arm of cable company Altice USA that runs on T-Mobile's network. And the company is now ready to ramp up its promotional efforts and add more customers as it shoots to achieve break-even status by the end of 2022 and profitability in 2023.

The company's new break-even goal represents a delay from its initial plans. Altice USA CEO Dexter Goei said back in 2019 that he believed the company would reach profitability by late 2020.

By contrast, Comcast revealed that its own Xfinity Mobile MVNO, which runs on Verizon's network, achieved break-even status earlier this year – just four years since its debut.

A very cheap deal

Altice made headlines back in September 2019 when it launched its wireless service with a price-tag that was much lower than any other unlimited offering. Altice at that time offered unlimited data for just $20 per line per month for its existing Optimum and Suddenlink cable customers, and $30 per line per month for all others regardless of whether they resided in Altice's wireline footprint.

At the time, the company said it could offer the low price of $20 per month because it operated the service on its own core mobile core network. When the company initially launched its mobile service, it was operating primarily on Sprint's network with additional coverage via a roaming deal with AT&T.

However, when T-Mobile closed its purchase of Sprint in 2020, Altice quickly inked a new, seven-year wholesale agreement with T-Mobile that included being able to use the company's emerging 5G network.

Working out the kinks

During Credit Suisse's 23^rd Annual Communications Conference earlier this summer, Altice USA CFO Mike Grau told investors that Altice has finally ironed out some of its issues with its mobile product, including completing the migration of its customers from Sprint's network to T-Mobile's network. At the end of the first quarter, Grau said that "substantially" all of its customers are now on T-Mobile's network, which contributed to a 20% decline in churn in the first quarter of 2021 compared to the first quarter of 2020.

Altice is already touting the fact that its wireless service runs on T-Mobile's network. The company has cited various network performance achievements that T-Mobile has been awarded, such as "fastest 5G" based upon Opensignal's 5G User Experience report from January 2021.

Grau also said that during the past year the company looked critically at its wireless product and decided it needed to solve two things: it had to make sure its wireless customers were profitable and it had to fix its pricing.

To solve those issues, Altice added more rate plans and increased its prices. It currently offers a 1 GB plan for $14 per month for existing Optimum and Suddenlink wireline customers and $24 per month for everyone else, and a 3 GB plan for $22 per month for existing customers and $32 per month for everyone else. It also sells an unlimited data plan for $45 per month for existing customers and $55 per month for everyone else.

Grau noted that the company is seeing a lot of interest in its 1 GB and 3 GB plans. "Our take rates on the limited plans are encouraging," he said.

According to financial analyst firm MoffettNathanson, about 60% to 70% of Altice Mobile's new customers are buying its 1 GB or 3 GB plans instead of its unlimited data plan.

Altice is currently substantially smaller than its MVNO peers in the cable industry. The company ended the first quarter with just 174,000 mobile lines and added only 5,000 new lines during the quarter.

By contrast, Comcast's Xfinity Mobile MVNO added 278,000 mobile lines in the first quarter of 2021, bringing its total customer base to 3.1 million lines. And Charter's Spectrum Mobile MVNO added 300,000 new lines in the first quarter for a total of 2.7 million mobile lines.

But Altice hopes to reduce the gap between it and the other cable MVNOs. Grau said that now that Altice's brick-and-mortar stores are fully open post-pandemic and the company has made some necessary pricing adjustments, it is now in position to "turn up the sales" and be more aggressive with its marketing and sales efforts at the end of the third quarter and into 2022.

— Sue Marek, special to Light Reading. Follow her @suemarek.