Altice USA Sticks to High-Fiber Diet
Despite cutting back on its overall capital expenditures, Altice is still going full speed ahead with its plans to go all-fiber throughout its US territories.
With the integration of its two new US cable properties (Cablevision Systems and Suddenlink Communications) continuing to proceed as planned, Altice is now building FTTH networks in the regions of both acquired cablecos. Plans call for blanketing nearly the entire Cablevision and Suddenlink footprints, encompassing a total of 8 million homes passed, with fiber by the end of 2022, at an estimated cost of up to $9.6 billion. (See Altice Plans FTTH for Entire US Footprint and Altice FTTH Bill Could Hit Almost $9.6B in US.)
In Cablevision's New York City metro region, for instance, Altice has "designed and architected" 75,000 homes for FTTH, according to Altice USA Chairman and CEO Dexter Goei. Speaking on the company's earnings call Thursday morning, Goei said 5,000 of those homes are now ready for marketing and he aims to start offering fiber-driven services in New York this summer or fall.
While the French communications giant plans to slash its capex budget across its properties from $5 billion last year to $4.2 billion this year, Goei said capital expenditures will continue at their current pace in the US. "We will maintain the same capex as today," he said. But he also ruled out any possible increases in capital spending, noting that the company is mainly upgrading last-mile connections on its largely aerial plant so it shouldn't need to hike spending. (See Altice to Slash 2017 Capex Despite US FTTH Plan, French Rivalry.)
As it did at the end of the third quarter, Altice, which became the fourth-largest MSO in the US with 4.6 million subscribers with its acquisitions of Cablevision and Suddenlnk, touted stronger operating results in Q4. The MSO boasted that its Suddenlink subsidiary boosted revenue by 6.7% on a year-over-year basis in the fourth quarter, up from 3.7% growth a year earlier, to $660 million. At the same time, its Optimum unit (Cablevision) increased revenue by 4.4% on a year-over-year basis, up from 0.1% a year earlier, to $1.6 billion. Combined, the two units generated 5.1% higher revenue in Q4 on a year-over-year basis, up from 1.2% growth in 2015, to hit $2.3 billion as they both added more customer relationships.
Cable Next-Gen Technologies & Strategies event on March 21-22, at the Curtis Hotel in downtown Denver.
Like most US cable operators, both Optimum and Suddenlink shed video subscribers in the fall quarter, with Suddenlink losing 9,000 video customers and Optimum losing 15,000. But these losses were at least offset by continued broadband subscriber gains for both, with Optimum netting 15,000 data subscribers and Suddenlink adding 19,000.
Despite the constant spread of OTT video services, Altice hopes to stem the continuing video losses and even stoke fresh pay-TV growth with the rollout of a "home entertainment center hub" in both subsidiaries' regions this year. Plans call for introducing the new, souped-up TV gateway device in the second quarter.
But, even more than video services, Altice is counting on broadband services to save the day. In its earnings report, the company reported that it now offers 1 Gig speeds over 58% of the Suddenlink network, up from 20% before the acquisition, while all its Optimum subscribers can now receive maximum download speeds of 300 to 350 Mbit/s, up from 101 Mbit/s before Altice took over.
With these network upgrades in hand, Altice is aggressively pitching higher-speed (and thus higher-priced) broadband plans to its customers, with increasingly favorable results. The company said 62% of its new Optimum broadband customers now opt for packages with maximum speeds of 100 Mbit/s or more, up from just 1% a year ago. As a result, 13% of Optimum's total broadband base of 2.6 million subs now have 100 Mbit/s or faster service, up from 5% a year ago.
Likewise, in the Suddenlnk areas, 59% of new broadband subscribers now take plans with maximum speeds of at least 100 Mbit/s, up from 34% when Altice took over at the end of 2015. As a result, 37% of Suddenlink's1.3 million broadband subs now have download speeds of at least 100 Mbit/s, up from 16% a year earlier.
— Alan Breznick, Cable/Video Practice Leader, Light Reading