- As cable operators try to improve broadband losses, an Altice USA exec thinks video – yes, video – will help it mount a comeback
- Altice is in the midst of a turnaround to cut costs and stabilize the business, but it’s taking a while
- On the bright side, Altice has made strides with its fiber rollout in 2024
Altice USA has been in turnaround mode for some time now. It’s trying to curb operating expenses and, like its cable peers, is grappling with broadband subscriber losses.
Nate Edwards, Altice’s EVP of Network Services and Business Transformation, thinks there’s no reason Altice – and the cable industry overall – can’t mount a comeback. Particularly with tools like video and mobile in its arsenal. Yes, you heard that right. Video.
It might sound counterintuitive to point to video as a potential savior given the segment has itself been on the decline for years now. But with streaming services continuing to hike prices, “I think that positions your traditional cable companies better than they have been, because everybody thought video was going away,” he told Fierce.
Altice has already shifted the gears of its video strategy, as it launched two new pay TV packages in October. Charter is another operator doubling down on giving customers more video options, in the hopes of locking down and expanding its broadband base.
Mobile, meaning Altice’s MVNO offering, is the other piece of cable’s “three-legged stool,” Edwards said. “People want aggregation, they want a single bill.”
Altice’s ship slowly turns
Ever since Altice CEO Dennis Mathew took the reins in 2022, the company’s been on a quest to cut costs, stabilize operations and also ramp up its fiber rollout. During Q3 earnings, Mathew reported Altice completed phase one of its turnaround, which saw the company beef up its telco team and reduce capex and opex spending by over $500 million.
“We are now progressing to Phase 2 of our journey, which is to accelerate business transformation,” Mathew said on the earnings call. “This work will position Optimum to succeed competitively, grow new revenue streams, moderate opex, deliver more value to our customers and communities and return to sustainable growth.”
Altice seems to be moving at a steady but slow pace. Michael Hodel, director of communications services equity research at Morningstar, said in November Altice has “taken a different approach to the business in recent years than other cable operators, with lackluster results.”
However, Altice’s new leadership, which mostly consists of Comcast alums, “has slowly been improving the firm’s performance.”
“We expect the firm’s networks will remain vital pieces of infrastructure that will generate strong, albeit slow-growing, cash flow over the long term,” said Hodel. “However, Altice USA’s very large debt load leaves little room for error.”
On the fiber front, Altice recently reached 500,000 residential subscribers and 3 million passings, most of which are in its Optimum East footprint across New York, New Jersey and Connecticut. It’s targeting 1 million fiber subs by the end of 2026.
“They are slowly turning the ship,” said Recon Analytics principal Roger Entner. “Some investors are impatient and would like a faster turnaround, but with the investment level in fiber, this is going to take time.”
Fiber competition has only gotten more intense over the years, Edwards added. Once a market has more than three fiber providers, it becomes much harder for newer entrants to snag a piece of the pie.
“It’s become more costly and harder to get in and get market share,” he said. “And I think you start seeing now folks are getting bought up a little bit.”
Altice’s main fiber competitor in the New York tri-state area is Verizon, which made headlines this year when it announced it will buy Frontier Communications for $20 billion.
Altice only overlaps Frontier in 4% of its Optimum East footprint, according to TD Cowen. Once Verizon takes over those markets in 2026, “Altice believes the transaction may result in some rationalization since Verizon is not as aggressive as Frontier on pricing,” said the firm’s analysts in October.
The TD Cowen analysts also think a sale of some of Altice’s assets – whether they are fiber, HFC or Suddenlink – could help the company “address its $25B looming debt stack.”
Aside from building more fiber, Edwards said Altice continues to upgrade its HFC plant in its western footprint, where its customers can get “two to four gig[s] downstream without very much network investment.”
When you look at how long these HFC upgrades take, “you’re talking six months or less,” he said. Whereas fiber builds can take anywhere from nine months to a year, “sometimes a little bit longer.”
All told, Edwards isn’t too worried about Altice’s growth trajectory or those who are saying, “you’re not where you need to be yet.”
“We’re very nimble, we’re very scrappy. We’re able to make changes and try things very quickly that bigger companies would take longer to do and struggle with,” he concluded.
