Altice USA continues to see sell-ins of its 1-Gig broadband products take off, particularly in its expanding fiber-to-the-home (FTTH) footprint.
Total 1-Gig sell-in jumped to 41% in Q4 2020, up from 29% in Q3 2020, across all areas where Altice USA offers such speeds. That sell-in rate rises to 67% in Altice USA's FTTH areas – the company ended 2020 with about 1 million homes with access to FTTH-based services.
With both its FTTH and hybrid fiber/coax (HFC) networks included, the company now offers 1-Gig speeds to 92% of its consolidated footprint.
Though broadband subscriber adds have been relatively split between the Optimum footprint (covering parts of New York, Connecticut and New Jersey) and the more rural Suddenlink footprint, only 25% of that activity is occurring in "Fios zones" where Altice USA competes with Verizon, Dexter Goei, Altice USA's CEO, said on today's Q4 2020 earnings call.
Altice USA is seeing "an absolute explosion" of broadband subscriber activity in Altice USA's relatively underpenetrated Suddenlink areas, Goei said.
Altice USA turned in a strong 2020 with respect to broadband subscriber adds driven in part by the pandemic, despite a hiccup in Q4. The company added 142,000 organic broadband subs for all of 2020 versus adds of 72,000 in 2019 but dropped 4,000 broadband net subs in Q4.
Goei was bullish that Altice USA would do better with respect to broadband in 2021 than it did in 2018 or 2019, citing plans to continue "edge-outs" that could expand the network to an additional 150,000 homes along with plans to upgrade roughly 400,000 homes in the Suddenlink footprint to 1-Gig that are currently delivering speeds of less than 100 Mbit/s today. He also expects Altice USA to generate more broadband action from its FTTH upgrades in the Optimum areas.
Overall broadband data usage rose 47%, to 468 gigabytes per month, and 591 GB among broadband-only subs. Average speeds delivered to broadband subs have roughly doubled over the past three years, to 283 Mbit/s by the end of Q4 2020. However, 55% of Altice USA's broadband customers are on plans delivering speeds of 200 Mbit/s or less, representing speed upgrade opportunities for Altice USA, Goei said.
Profitability focus for video and mobile
Altice Mobile, a service launched in the fall of 2019 powered by an MVNO deal with Sprint, added 7,000 lines in Q4 2020, extending its total to 169,000. That piece of the business brought in revenues of $20.2 million in Q4 2020 and $78.1 million for the full year. At the end of January, roughly 90% of Altice Mobile customers have been migrated to the T-Mobile network, leading to a 15% reduction in dropped calls, the company said.
So far, a majority (66%) of Altice Mobile customers are on 1 GB or 3 GB plans, with the balance on its unlimited data option.
Goei reiterated that Altice Mobile is focused on profitably and won't overspend on media and marketing merely to push subscriber growth. He now expects the company's mobile business to reach break-even on a monthly basis toward the end of next year.
Altice USA shed 74,000 video subs in Q4 2020. Like many of Altice USA's service provider peers, Goei largely shrugged that off, noting that the company will not chase after unprofitable video subs.
Altice USA's video business is declining as attachment rates for pay-TV continue to fall. Goei estimated that the company has seen attachment rates for video dip to about 40%, off from about 60% two years ago.
Goei also dropped some hints with respect to M&A after the company failed in its play for Cogeco. He said there are a "handful" of smaller operators that are available to acquire, with maybe two that could provide a good fit from a geographic and competitive standpoint.
- Altice USA gives up on Cogeco
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- Altice Mobile debuts $20 per month 'price for life' to Optimum and Suddenlink subs
— Jeff Baumgartner, Senior Editor, Light Reading