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May 3, 2023
Altice USA is pushing ahead with a fiber buildout, focused on areas in the northeast where it is competing against Verizon Fios. However, fiber gains in the first quarter of 2023 weren't enough to avoid an overall loss of broadband subscribers.
Meanwhile, Altice USA is also looking into ways to outsource its struggling video business, particularly in areas where it's building out new fiber networks.
On the broadband end, Altice USA lost 19,200 residential customers, which widened slightly from a year-ago loss of -12,000, ending the quarter with 4.26 million. Those losses come from the company's hybrid fiber/coax (HFC) network. Altice USA also added a record +38,000 fiber broadband subs (including 37,200 residential fiber subs) in the period – up from a year-ago gain of +11,000. Altice USA's fiber sub gains are coming from an even mix of new customer adds and migrations of existing HFC customers to fiber.
Altice USA's fiber-to-the-premises (FTTP) network upgrades also moved forward in the quarter, particularly in the Optimum East footprint serving parts of New York, New Jersey and Connecticut.
Altice USA added 214,000 FTTP passings in the quarter, ending the period with 2.37 million total fiber passings. That's up from the additions of 146,000 in the year-ago period, but behind the +251,000 passings built in the prior quarter. The company is on track to build FTTP to about 900,000 locations passed for the full-year 2023.
Figure 2: Click here for a larger version of this image.
(Source: Altice USA Q1 2023 earnings presentation)
The company offers symmetrical speeds of up to 5 Gbit/s today on its FTTP network, and expects to soon launch a symmetrical 8-Gig service that's expected to be available across 100% of its fiber footprint in the east.
Dennis Mathew, Altice USA's new CEO, said the company has a plan to offer speeds up to 25 Gbit/s on its PON network as soon as equipment is ready. It's also exploring speeds of 50-Gig and 100-Gig using channel bonding and wavelength division multiplexing techniques, he added.
"So, [the fiber network] is really future-proofed and really scalable in a way that legacy network technologies are not," said Mathew, a former Comcast exec who took the helm of Altice USA last fall.
Altice USA is being "more opportunistic" with fiber upgrades in its more rural Optimum West footprint. The company is instead focusing on upgrading the HFC plant there to DOCSIS 3.1.
From a broader standpoint, Mathew said Altice USA sees ARPU in the range of $10 to $15 higher with fiber compared to HFC.
Bullish about 'Optimum Complete' service convergence bundle
Optimum Mobile is growing, just not at the torrid pace seen at Comcast and Charter Communications. Altice USA added 7,600 lines for a total of 248,000, a figure kept in check by customers rolling off a promotion last year that offered free lines.
Altice USA hopes its mobile numbers rise following this week's launch of Optimum Complete, a new convergence bundle that combines home broadband with mobile.
"We're already seeing the benefits" of Optimum Complete, Mathew said, noting that the company saw its best two days of selling mobile on Monday and Tuesday of this week.
That new bundle also fits in with a strategy whereby Altice USA will focus on total household ARPU (average revenue per user) rather than ARPU on an individual product basis, he said.
Meanwhile, the company hopes its combined efforts will lead to a return to a broader growth of broadband subscribers, revenues and cash flow. However, the company is not yet predicting when it expects to turn those corners.
Video business outsourcing
One area that's not likely to help much in that cause is video/pay-TV. Altice USA lost 58,600 video subs in the quarter, reducing its total to 2.38 million.
As such, the company is looking closer at its video business and how it fits into the services portfolio in the future. An analyst asked if Altice USA might consider outsourcing the video business.
"Anything is possible. We are looking at all of these options," Mathew responded. "As we build out into new build territories, we're actively having conversations of: Should we build out video infrastructure or should we be looking at partnering as some others have done?"
Elsewhere in the numbers, revenues dropped 5.3%, to $2.29 billion, which included a 5.6% dip in residential services revenues. Altice USA also saw capex climb to $582.9 million, or 25.4% of revenue, due largely to its fiber buildout projects.
— Jeff Baumgartner, Senior Editor, Light Reading
Senior Editor, Light Reading
Baumgartner also served as Site Editor for Light Reading Cable from 2007-2013. In between his two stints at Light Reading, he led tech coverage for Multichannel News and was a regular contributor to Broadcasting + Cable. Baumgartner was named to the 2018 class of the Cable TV Pioneers.
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