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Altice USA Q1 Revenues Rise 1.8% to $2.36B

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NEW YORK -- Altice USA (NYSE:ATUS) today reported results for the second quarter ended June 30, 2018.

Dexter Goei, Altice USA Chief Executive Officer, said: "We are very pleased with Altice USA’s second quarter performance, which included improved subscriber trends, accelerating revenue growth and a material step up in free cash flow. Our residential video business is trending better year over year and we continue to see significant increases in data usage on our broadband network, driven mostly by video streaming across multiple devices in the home. As a result, our customers are demanding faster broadband speeds and enhanced WiFi coverage. We are facilitating these evolving data consumption needs through our network upgrades to provide the best connectivity services and quality experience, allowing us to achieve continued improvements in our subscriber trends and higher cash flow conversion. Our investments in broadband including FTTH, Altice One and Altice Mobile, are advancing this strategy by providing a platform for converged fixed / wireless services and seamless integration of linear and OTT video content which we believe position us extremely well for the future. Lastly, the strong growth we are seeing in our a4 targeted digital advertising business demonstrates our success in developing new and innovative products for advertisers.”

Altice USA Key Financial Highlights

  • Revenue growth of +1.8% YoY in Q2 2018 to $2.36 billion, driven by Residential revenue growth of +1.0%, Business Services revenue growth of +4.2% and advertising revenue growth of +12.7%
  • Adjusted EBITDA grew +1.5% YoY in Q2 2018 to $1.01 billion; Adjusted EBITDA margin was in line with prior year at 42.5% (+4.2% YoY Adjusted EBITDA growth excluding approximately $26 million of costs in the current period relating to i) the impact of consolidating i24 losses and legal matter accruals which were expenses not incurred in Q2 2017, and; ii) management fees and certain ATS US costs which will not be incurred in future periods1. Excluding these items Adjusted EBITDA margin was 43.6%)
  • Operating Free Cash Flow2 declined -2.5% YoY in Q2 2018 to $765 million with an OpFCF margin of 32.4% vs. 33.8% in Q2 2017 with higher investment in key growth initiatives
  • Free Cash Flow3 grew +73.4% YoY in Q2 2018 to $488m, supporting the $1.5 billion cash dividend paid to all Altice USA shareholders immediately prior to the separation from Altice N.V.
Altice USA Operational Highlights

  • Total unique Residential customer relationships stable YoY (+0.1% YoY) with quarterly net losses of -4k in Q2 2018 improving compared to prior year (-12k in Q2 2017). Suddenlink driving improved customer trends YoY again with Optimum trends normalized in Q2 2018 as expected after Starz and storms impacts in Q1 2018
  • Pay TV RGU quarterly net losses of -24k in Q2 2018 were better than the prior year (-37k in Q2 2017) due to another significant improvement in Suddenlink’s performance (-11k losses in Q2 2018 vs. -25k in Q2 2017) ahead of full expansion of Altice One rollout
  • Residential broadband RGU quarterly net additions of +10k and telephony RGU net losses of -4k in Q2 2018 also improved compared to prior year (vs. +2k and -7k in Q2 2017 respectively)
  • Residential ARPU increased 1.0% YoY to $140.2 in Q2 2018, supporting Residential revenue growth of +1.0% YoY which is expected to accelerate in 2H 2018 with rate event (fully effective only from end of June 2018)
  • Solid Business Services revenue growth of +4.2% YoY in Q2 2018 boosted by strength in Enterprise & Carrier segment of +5.4% YoY with SMB growth of +3.6% YoY (expected to accelerate in 2H 2018 with rate event fully effective only from end of June 2018)
  • Advertising revenue growth of 12.7% YoY in Q2 2018 supported by investment in multiscreen and national targeted audience capabilities
  • Continued enhancement of data services with an increased demand for higher speed tiers and growing data usage; over 90% of Residential broadband gross additions taking download speeds of 100Mbps or higher at end of Q2 with over 60% of Optimum customers using over 100GB of data per month
  • Up to 400Mbps broadband speeds were available across 88% of Altice USA’s footprint by the end of Q2 2018, including 98% of the Optimum footprint, with 73% of the Suddenlink footprint now able to receive up to 1 Gigabit speeds

Altice USA

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