Reflecting the results of some of its peers, Altice USA turned in big broadband numbers and a rise in mobile customers in the first quarter, alongside an acceleration of pay-TV losses.
Altice USA added 60,000 broadband customers in the quarter, including 9,000 via Altice Advantage, the operator's low-cost service for qualified families and seniors.
Altice USA, which added 37,000 broadband subs in the year-ago quarter, said total broadband revenues in Q1 jumped 14.2%, attributing it to a mix-shift to standalone broadband service, voluntary speed upgrades and rate increases.
Voluntary speed upgrades nearly doubled in March versus the prior month, Dexter Goei, Altice USA's CEO, noted on today's call.
Meanwhile, Altice USA has broadened the availability of 1-Gig across both its Optimum (former Cablevision Systems) footprint in parts of New York, New Jersey and Connecticut and its more rural Suddenlink footprint. About half of its Optimum footprint now has access to 1-Gig and more than 75% can get it in the Suddenlink areas.
Goei said Altice USA was forced to slow down its fiber-to-the-premises (FTTP) rollout in the Optimum region because of delays in permitting. That has, in turn, caused the company to reduce its 2020 capex outlook to sub-$1.3 billion. Additionally, Altice USA has temporarily put more emphasis on 1-Gig upgrades using DOCSIS 3.1 on its legacy hybrid fiber/coax plant in the Optimum footprint.
Goei said gross adds of 1-Gig customers are up 56%, and the sell-in rate of that product is now 13% across all gross adds where that tier is available. At quarter's end, Altice USA's average downstream broadband speed per customer was 222 Mbit/s, about triple where it was in Q1 2017 (70 Mbit/s). But about two thirds of its broadband base is still on tiers of less than 200 Mbit/s, which Goei views as a significant upgrade opportunity.
Goei also offered some color on the effects of Altice USA's participation in FCC Chairman Ajit Pai's "Keeping Americans Connected Pledge," which, in part, calls on ISPs not to disconnect customers who can't pay.
Altice USA had about 6,000 "pledgers" in Q1, which grew to somewhere in the neighborhood of 25,000 by late April but have slowed materially in the last week, Goei said. He added that about 30% of that group are now paying and are current on their bill.
At the moment, Altice USA has done little with a self-install model as it was not a major priority before the pandemic, but the company believes it will be able to keep up with demand as markets start to open up. Building that self-install capacity is on the roadmap, but the company is probably another year away from having that program up and running in a big way for its FTTP and DOCSIS products.
Video losses in Q1 accelerated to 42,000, compared to a loss of 30,000 in the year-ago quarter. Goei attributed those losses more to a reduction of video attachments among gross adds rather than "cord-shaving" or the cutting of pay-TV from the bundle. At the same time, discussions are ongoing with ways to team up with OTT-TV services, Goei said.
Altice USA tacked on about 41,000 lines for Altice Mobile, a service that taps into the MSO's own Wi-Fi networks and its MVNO with Sprint, which has since merged with T-Mobile. Altice USA, which is prepping 5G services, ended with period with about 110,000 mobile customers, or almost 3% of the company's broadband sub base.
March volumes slowed down as Altice USA ended the promotional offer it made in tandem with last fall's mobile product launch and the more recent closure of retail stores during the lockdown. About 40% of new gross adds for mobile were coming through retail stores. Altice USA is now looking to beef up its inbound sales and digital sales of the product and is planning to launch a promotional offer for mobile that will launch before May 15.
Discussions are underway on how to get those customers on the T-Mobile network, but it's too early to call when that will be done, Goei said.
Led by broadband growth, total Altice USA revenues in Q1 rose 2.2%, to $2.4 billion. Business services revenues were up 3.9%. Like its peers, Altice USA's business services unit is challenged by SMBs that have closed up shop temporarily during the lockdown but has seen some of them seek speed upgrades.
- Altice USA expands 1-Gig footprint
- Altice USA earmarks $10M to help small businesses
- Comcast sees broadband and mobile gains but greater video pain in Q1
- Altice USA boosts pay for field techs, retail employees who interface with customers
- US ISPs back Pai's 'Keep Americans Connected Pledge'
— Jeff Baumgartner, Senior Editor, Light Reading