Altice Plans FTTH for Entire US Footprint
Altice appears to be turning its Gallic nose up at DOCSIS 3.1 in the US market, saying it will now plow funds into a fiber-to-the-home (FTTH) network capable of supporting 10Gbit/s connection speeds across its entire footprint.
The plans, confirmed in an official statement earlier today, will see Altice -- controlled by French billionaire Patrick Drahi -- use proprietary technologies developed by its own R&D unit to roll out high-speed connections over the 2017-22 timeframe.
In the US, Altice's Suddenlink Communications and Optimum subsidiaries, both of which it acquired in the past year, have previously relied on cable-based DOCSIS 3.0 technology to offer broadband services.
While most cable operators see DOCSIS 3.1 as the next logical upgrade, Altice's announcement suggests it has doubts about the return on investment potential of that technology, which uses the HFC (hybrid fiber coax) plant deployed by cable operators.
In pursuing a fiber-to-the-home deployment, Altice might have been expected to use either XGS-PON or NG-PON2 -- emerging standards that are in the crosshairs of major telcos such as AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) and should be able to support multi-gigabit-speed connections -- or Radio Frequency over Glass (RFoG), a technology option developed for cable operators seeking to upgrade to "deep fiber" deployments. (See Service Provider Split Emerges Over NG-PON2 Upgrade.)
However, the company's insistence that it will use proprietary technologies developed by Altice Labs suggests these technologies might not figure in its plans.
A big question is how much all of this will cost. Altice says it expects to cover the entire Optimum footprint and most of the Suddenlink footprint by the end of 2022, and that it will announce "initial rollout markets" in the coming months.
According to Altice's last earnings update, Optimum's network passed 5.075 million homes in September, while Suddenlink's passed 2.91 million.
Elsewhere, operators have balked at the cost of extending fiber networks all the way to customer premises, and Altice is already one of the most heavily indebted operators on the planet. In September, its overall net debts stood at an eye-watering $49.3 billion ($52.5 billion), or roughly 5.7 times its annual earnings (before interest, taxation, depreciation and amortization).
Most of Europe's biggest telcos report net-debt-to-EBITDA ratios of between 2 and 3.
Altice, however, reckons it can pursue its FTTH plans without having to significantly increase the budget for capital expenditure, which hit €1,356.8 million ($1,442 million) across the Group in the July-to-September quarter, or about 22.9% of revenues on a pro forma basis.
How? By "[reinvesting] efficiency savings to support the buildout," it says in its statement on the plans.
Given its balance-sheet position, Altice is obviously keen to play down any concern about future spending needs, but this ambition seems optimistic -- notwithstanding the company's reputation as a ruthless cost cutter.
For more on Altice's plans, see this story from our sister publication UBB2020.com: Altice Favors Fiber Over D3.1 for Its US Upgrade
— Iain Morris, , News Editor, Light Reading