With the launch of its new home entertainment center hubs and its accelerating rollout of FTTH networks in its US markets, Altice is probably offering the most bullish outlook of any major cable operator in the business right now.
Altice USA, the American division of Altice , announced late Thursday that it will start rolling out the new communications hubs, known as Altice One, in select portions of its main New York market next week. The new, cloud-based "connectivity" platform -- a compact set-top box designed to offer customers access to traditional pay-TV and over-the-top video services, high-speed broadband, whole-home WiFi, telephony, a voice remote and other features -- takes the place of today's traditional digital set-top, cable modem and router. Originally slated to be introduced earlier this year, the hub, developed by Altice Labs and based on a similar European device called “La Box,” has recently been in customer trials.
Speaking on the company's third-quarter earnings call Friday morning, Altice USA Chairman & CEO Dexter Goei said the first Altice One box will be installed in a Long Island subscriber's home on Monday. Plans then call for deploying the hub entirely across the MSO's roughly 8.5 million-home US footprint by the end of next year. In an earlier conference call with reporters, Goei said the rollouts will concentrate on double play and triple play customers, which make up about 60% of the company's customer base. (See Altice Hopes Hubs Will Move Needle.)
Calling Altice One "just the beginning of a new, better and simple experience for Altice’s Optimum and Suddenlink customers," Goei said improvements and additions to the hub's features will be coming shortly as the MSO looks to "become the connected home provider of choice now and into the future." Along those lines, Altice USA announced earlier this week that it will begin offering Nest connected home products and services to its customers. (See Altice USA Begins Offering Nest Products .)
Besides hailing the new hubs in its earnings call, Altice played up its accelerating rollout of FTTH in the US. With 150,000 homes now passed by all-fiber networks, the company aims to boost this total to 1 million residences by the end of 2018. To that aim, it intends to have all those homes "designed" for FTTH deployment by the close of this year.
The bullish moves come as Altice USA reported modest but generally better-than-expected customer and revenue figures for the third quarter while continuing to cut costs and boost its hefty profit margins. It shed about 33,000 video customers, an improvement over the 40,000 subscribers it lost in the prior year, while gaining 16,000 broadband customers, slightly down from 17,000 in the same period last year. As a result, it closed September with 3.4 million video customers, just over 4 million broadband subscribers and 4.9 million total customer relationships.
Altice USA's overall revenue rose to $2.3 billion, up 3.2% from a year earlier while cash flow climbed 18.9% to $1.03 billion. Most notably, the company's consolidated margins, already among the highest in the cable industry, continued to move upward, reaching an impressive 44.1%.
The latest results were enough to turn the head of Wall Street analyst Craig Moffett, principal of MoffettNathanson LLC , who has been critical in the past of the company's strategy of improving its bottom line mainly through cost-cutting. In a note to investors late Thursday, Moffett admitted that he may have gotten it wrong about Altice.
"We don't expect a single quarter's results to put the debate to rest, but it must be conceded by the skeptics (of which we were undeniably one a year or so ago) that Altice is having its cake and eating it too," Moffett wrote. "Their growth metrics aren't great, but they are good enough, particularly when paired with their continued strong cost-cutting story."
— Alan Breznick, Cable/Video Practice Leader, Light Reading