Altice USA looking at MVNOs, but not necessarily buying

Altice USA CEO Dexter Goei confirmed that the company has explored ways to get more involved in the MVNO market, but stressed that perusal won't necessarily result in an acquisition.

"Yes, we have looked at MVNOs. Just because we've looked at them doesn't mean we're going to acquire them," Goei said Thursday at the Goldman Sachs Communacopia Conference. He said Altice USA's interest in the MVNOs could cover areas such as branding and distribution.

That came up when Goei was asked to address a report that Altice USA is a potential lead buyer in Mint Mobile, the MVNO that is partly owned by actor Ryan Reynolds. According to the New York Post, it has been on the block, looking to sell for up to $800 million.

Whether Altice USA will notch any sort of new MVNO agreement is yet to be seen, but Goei said Altice USA is happy with T-Mobile, which became its MVNO partner after the T-Mobile-Sprint merger. Altice USA, he said, is "very satisfied" with the way T-Mobile has been "rehoming" Optimum Mobile customers to the T-Mobile network, and talks continue about what Altice USA can or can't do under its agreement with T-Mobile.

But Goei does expect Altice USA to get more aggressive with mobile marketing in Q1 2022 as the company pushes ahead with tweaks to its product portfolio and a rebranding of Altice Mobile to Optimum Mobile.

Goei declined to provide any new mobile subscriber guidance. "But the pace is going to quicken materially in 2022," he said.

Altice USA's mobile business added 5,000 lines in Q2 2022, ending the period with 180,000 lines, or a penetration of 3.8% of the company's residential base. Altice USA launched that product as Altice Mobile roughly two years ago.

Broadband to be thrown for a loss in Q3

Altice USA's stock took a 12% hit Thursday after Goei warned that the company expects to lose broadband subscribers in the third quarter of 2021.

"Our numbers are going to be negative coming into Q3 in terms of Internet adds, probably to the tune of 15,000 to 20,000, which gets us to a trend of being flattish to slightly up for the year," he said.

"It's disappointing in terms of our results," Goei added, noting that Altice USA has averaged about 72,000 broadband net adds in 2018 and 2019, and pulled in 145,000 in the pandemic-fueled 2020.

He said Altice USA has seen underwhelming gross ads during the back-to-school period, but said he company is "getting some traction" with new price points introduced in September. He's hopeful for a return to relative normalcy in Q4 2021 in a way that pushes Altice USA's broadband to the positive side.

"The foundation of the business is still in place," he said.

Fiber the 'winning hand'

Meanwhile, Goei said Altice USA is on track to pass about 1.5 million homes – mostly in Fios territory on the east coast – by year end.

The question now is whether Altice USA wants to ramp up to finish upgrading the other 1.5 million homes being targeted at a faster pace and possibly explore other areas outside the competitive Fios zones for fiber-to-the-premises (FTTP) overbuilds.

"Ultimately, we think fiber is the winning technology going forward as opposed to improvements of DOCSIS technology," he said.

Altice USA is working out some "kinks in the system" for FTTP that have slowed down the company's ability to migrate customers to fiber. One issue relates to the company's triple-play gateway for FTTP, which has forced Altice USA to push some pay-TV customers to its traditional HFC platform. That problem should be resolved by the end of the year, Goei said.

Altice USA is also working to find some parity on install times between its HFC and fiber products. HFC-based products get installed within an hour, but installs take three times as long for fiber products, Goei said.

Other stuff

The Altice USA exec also addressed the recent and unexpected resignation of COO Hakim Boubazine, noting that "the buck will stop with me."

"The change is really meant to focus on getting decisions done quicker, being more focused on as a firm across all silos … So, we thought it was a good time to make that change," he explained. "Me coming in really helps flatten he organization, allows people to have a lot more say in their opinions, and it rises quickly to my attention and they'll be able to react in a much more flexible way."

Goei was also asked to respond to recent suggestions that Altice USA could achieve significant value by taking the company private. He said the current focus in the coming years will be on reinvesting in and accelerating Altice USA's underlying business.

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— Jeff Baumgartner, Senior Editor, Light Reading