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Altice USA Revenues Inch Up to $2.44B in Q3

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11/5/2019

NEW YORK -- Altice USA (NYSE: ATUS) today reported results for the third quarter ended September 30, 2019. Dexter Goei, Altice USA Chief Executive Officer, said:

"In the third quarter, Altice USA made significant progress against our strategic growth initiatives, including the launch of Altice Mobile, further adoption of Altice One, completion of the Suddenlink and Optimum integration through the BSS/OSS transformation, capital structure simplification, and ongoing construction of our fiber to the home network. We're pleased that our customer-focused initiatives are already contributing to strong underlying customer trends, reflecting the benefits of our increased investments in our networks, products and the customer experience. As we now turn our focus to scaling our efforts, we look forward to accelerating our revenue and Adjusted EBITDA growth in 2020 as we begin to realize the benefits of our investments."

Key Financial Highlights

  • Revenue growth +0.9% YoY in Q3 2019 to $2.44 billion, driven by Residential revenue growth of +0.5%, Business services revenue growth of +3.9% and News and Advertising revenue decline of -4.7%. • Net income attributable to stockholders of $77 million in Q3 2019, or $0.12/share (from net income of $33 million in Q3 2018, or $0.04/share).
  • Adjusted EBITDA(1) flat YoY at $1.07 billion, an Adjusted EBITDA margin of 43.8% in Q3 2019 (+0.7% YoY Adjusted EBITDA growth and 44.3% Adjusted EBITDA margin, each excluding mobile losses(2)).
  • FY 2019 revenue outlook updated: the company now expects revenue growth of approximately +2.5% YoY based on the initial contribution from Altice Mobile, having not yet launched handset sales online, which is expected to be a key driver of Altice USA's anticipated accelerated growth in 2020. Guidance for Adj. EBITDA margin, Capex, Free Cash Flow growth, and the company's Leverage target, remain unchanged.

Key Operational Highlights

  • Altice One has supported resilient video customer trends, including in Q3 2019 adjusting for the estimated one-time impact of the OSS / BSS migration(3). Altice USA's ongoing network investment and Altice One's advanced WiFi experience supported improved residential broadband trends as well in the quarter. Altice USA reached 492k unique Altice One customers as of Q3 2019 (approximately 15% of total video customers, up from 7% at the end of Q3 2018).
  • Total unique Residential customer relationships grew +0.7% YoY in Q3 2019 and were flat compared to the prior quarter (vs. -5k net losses in Q3 2018) on a reported basis, supporting Residential revenue growth of 0.5% YoY. Adjusted for the impact of the OSS / BSS migration, unique Residential customer relationship net additions estimated to have been +8k.
  • Residential Video RGU quarterly net losses of -32k in Q3 2019 (vs. -28k in Q3 2018) on a reported basis; adjusted for the impact of the OSS / BSS migration, video net additions estimated to have been -28k, in line with the prior year.
  • Residential Broadband RGU quarterly net additions of +15k (vs. +14k in Q3 2018) on a reported basis; adjusted for the impact of the OSS / BSS migration, broadband net additions estimated to have been +24k, significantly ahead of the prior year.
  • Residential ARPU per unique customer was flat (-0.1%) YoY at $143.63 in Q3 2019 due to timing of prior year rate event
  • Business services revenue growth of +3.9% YoY in Q3 2019 with growth in Enterprise & Carrier of +2.1% YoY and SMB +4.9% YoY.
  • News and Advertising revenue decline of -4.7% YoY in Q3 2019 due to political advertising cycle (+7.4% growth ex-political), offset by revenues from Cheddar and Altice USA's advanced advertising platform a4.
  • Continued network investment is supporting increased demand for higher speed tiers and significant growth in data usage. The average broadband speed taken by Altice USA's customer base has increased approximately fourfold in the past three years to 208 Mbps at the end of Q3 2019 (from 56Mbps at the end of Q3 2016) and average household data usage was over 290GB per month (growth over 20% YoY).

FY 2019 Outlook Updated
For the full year 2019, the company now expects revenue growth of approximately 2.5% YoY based on the initial contribution from Altice Mobile, having not yet launched handset sales online, which is expected to be a key driver of Altice USA's anticipated accelerated growth in 2020. Guidance for Adjusted EBITDA margin, Capex, Free Cash Flow growth, and the company's Leverage target, remain unchanged

Altice USA

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