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Altice Hopes Hubs Will Move Needle

Seeking to stem customer churn and drive new video subscriber and revenue growth in its US markets, Altice is counting on the upcoming rollout of its home entertainment center hubs to make the difference.

Speaking on the international MSO's first-quarter earnings call Thursday morning, Altice USA Chairman and CEO Dexter Goei said Altice intends to begin introducing the centralized video gateways in its New York-based Optimum (Cablevision) footprint next month. Plans then call for extending the rollout to its more far-flung Suddenlink properties across the nation before the end of the summer, just in time for back-to-school promotions in the company's many college markets. (See Altice USA Preps for Home Hub Rollout.)

Goei said he hopes to see the hubs start making a difference in Altice USA's video results by the end of the third quarter and in the fourth quarter. "Let's see what the numbers look like then," he said.

The hub launch comes as Altice USA faces stiffer competition from telco and satellite TV rivals in both its Optimum and Suddenlink markets, hurting the company's video subscriber recruitment efforts and driving up churn rates. In the Suddenlink territories, for instance, Altice is fighting against increased competition from DirecTV and Dish Network, along with their companion OTT video skinny bundle services. "Suddenlink is more impacted by competition from satellite," Goei said.

In the first quarter, Suddenlink lost 20,000 video subscribers, lowering its total to less than 1.1 million. Optimum lost 15,000 subs from a much larger customer base, reducing its total to just over 2.4 million. Optimum's video sub loss just about matched its 14,000-sub loss in the year-ago quarter while Suddenlink's sub loss widened from 4,000 a year earlier.

Despite the video customer losses, Altice reported that its US unit's revenue rose to nearly $2.2 billion, up 3.8% from a year earlier, largely because of strong broadband and business services growth. Optimum's revenue climbed to $1.6 billion in the quarter, up 3.2% from the year before, and Suddenlink's revenue increased to $661 million, up 5.3% from the year before.

Alrice's healthy revenue growth numbers contrasted with its tepid revenue growth in France and Portugal, its two other biggest markets. In France, the company reported Q1 revenue of €2.7 billion ($2.9 billion), up 0.6% from a year earlier. In Portugal, it reported revenue of €573 million ($623 million), up 0.2%.

But Altice executives actually took pride in those European results on their earnings call, noting that their revenues have stabilized in both countries after years of declines. They also boasted about the progress they have made in improving the competitive posture and finances of both their French SFR and Portuguese MEO units. (See Altice to Slash 2017 Capex Despite US FTTH Plan, French Rivalry.)

Overall, Altice Group revenues rose 3.2% to around €5.9 billion ($6.4 billion), while adjusted EBITDA climbed 9.5% year-over-year to more than €2.2 billion ($2.4 billion).

In addition, Altice officials used the earnings report and call to update analysts on the company's progress in extending fiber throughout their French, Portuguese and US cable plants. For instance, in Portugal, they said they now have FTTH lines passing 3.2 million homes and are "on track to become the leading fiber operator" there with 4 million homes passed by the end of the year.

On the content side, Altice announced the acquisition of broadcast rights to two soccer leagues -- the UEFA Champions League and the UEFA Europa League. The packages include exclusive broadcast coverage over free TV, pay TV, mobile, Internet, OTT and DTT in France, as well as non-exclusive French coverage rights in Luxembourg, Switzerland and Monaco.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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