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MVNO Altice Mobile Could Rack Up 1.7M Customers by 2021

Sue Marek
11/20/2019

Altice Mobile made its debut in September and its inexpensive $20-per-month price point is already showing early signs of disrupting the US wireless market. In fact, one investment firm predicts the cable MVNO, which operates primarily on Sprint's network and offers roaming through AT&T, will have as many as 1.7 million wireless customers by year-end 2021 and will be a compelling rival to much larger cable MVNOs like Comcast's Xfinity Mobile and Charter's Spectrum Mobile.

Altice reported 15,000 customers in the third quarter -- after offering service for less than a month and providing limited marketing support. It also said it had generated $3 million in revenue so far.

Altice is offering wireless services to people who live in or near where Altice offers home Internet service. The company was formed in 2015 when European-based Altice NV decided to purchase Cablevision and Suddenlink and enter the US market. It is now the fourth-largest US cable operator and its markets include the New York metro area, parts of New Jersey, Connecticut, Pennsylvania, West Virginia, North Carolina, Missouri, Arkansas, Louisiana, Oklahoma, Texas, Arizona and Idaho.

Altice is selling its new mobile service in its brick-and-mortar stores and is still working on its online sales channels. "Our initial focus has been on optimizing customer service and the on-boarding process, working through any initial teething issues, which is normal for any new product launch," said Altice CEO Dexter Goei, according to a Seeking Alpha transcript of the company's third-quarter earnings call with investors. Goei also said they are training more sales and customer service reps so they can handle a higher volume of sales.

Keeping it simple
Altice's goal is to have a simple wireless offering -- it's charging $20 per month for unlimited talk, text and data to its existing broadband customers and $30 a month for unlimited talk, text and data to non-broadband customers. Customers can bring their own handsets or they can purchase smartphones at Altice retail stores that operate under the Optimum and Suddenlink brand. The company plans to offer handsets via its online channel this month.

That $20 per month price point is dramatically lower than the $45 per month for unlimited data offered by Xfinity Wireless, which operates on Verizon's network. It's also much lower than similar services from the likes of Boost Mobile or Metro by T-Mobile.

Wall Street investment firm New Street Research is bullish on Altice's price point. In a research note, New Street said it had conducted a survey with consumers and found that 68% of households in the Altice market area would be interested in a wireless service for $20 a month. Based upon the survey's results, New Street believes that Altice will have 800,000 net adds in 2021 and 1.7 million wireless subscribers by the end of 2021 (or about 12% penetration of potential subscribers in its markets). It also estimates it will generate about $8 billion in wireless revenue that year.

That's a much higher penetration rate than New Street projects for Xfinity Wireless or Spectrum Mobile.

Wall Street investment firm Nomura also believes Altice's pricing is a winner for consumers. However, its projections for subscriber growth are much more modest. Nomura said that it believes Altice has the potential to nab about 420,000 wireless customers by year-end 2020, and it will reach about 2% of its potential 35 million subscribers in its markets in 2021.

Small cell strife
Altice describes itself as an infrastructure-based MVNO because it operates its own core infrastructure and doesn't rely solely on Sprint. It also took the additional step of deploying about 19,000 small cells on Long Island to help improve coverage

New Street, however, found issues with Altice's small cell deployment. Based upon coverage data commissioned by testing company Tutela, New Street said it doesn't think Altice's small cells have improved the network. "It doesn't seem like the deployment of 19k small cells has improved Sprint's network much," New Street said. "Sprint's network in Long Island appears worse than the rest of the country, and Sprint still lags other national carriers in Long Island."

And not only is Sprint's network performance a problem for Altice, its brand is too. New Street said that in its survey of consumers it found that households in Altice's markets view Sprint negatively. About 35% of those that were interested in Altice's wireless service said they would change their mind if they knew Sprint was the network partner.

One area that Altice is exploiting is its offloading of data traffic from Sprint's cellular network to the cable company's public WiFi hotspots. During its earnings call with investors Goei said that on average its wireless users are using between 6GB and 8GB of data and Altice is offloading about 1GB. By offloading that data, Altice is able to pay less to its MVNO partners Sprint and AT&T.

— Sue Marek, special to Light Reading. Follow her @suemarek.

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