Altice USA’s Earnings Call: Mixed Sentiments and Strategic Focus

Altice Usa ((ATUS)) has held its Q3 earnings call. Read on for the main highlights of the call.

Altice USA’s recent earnings call presented a mixed sentiment, highlighting both achievements and challenges. The company celebrated record gross margins and substantial mobile revenue growth, yet faced hurdles such as broadband subscriber losses and a significant impairment charge. Despite these challenges, Altice emphasized its commitment to operational efficiency and improving customer satisfaction amidst intense market competition.

Record Gross Margin

Altice USA reported a record gross margin of 69.7%, achieving this milestone a full year ahead of schedule. This impressive figure is attributed to a strategic shift away from video services, marking a significant achievement for the company.

Mobile Service Revenue Growth

The mobile segment of Altice USA showed robust growth, with mobile service revenue increasing by 38% year-over-year. This growth underscores the company’s successful efforts to expand its footprint in the mobile market.

Lightpath Expansion

Lightpath, a division of Altice USA, announced plans to build 130 route miles of AI-grade fiber infrastructure in Eastern Pennsylvania. This expansion is part of a broader strategy that resulted in nearly 6% revenue growth for Lightpath.

Improvement in Customer Satisfaction

Customer satisfaction has seen a notable improvement, with relationship NPS rising by 6 points over the last year and 17 points over the past three years. This reflects Altice’s focus on enhancing customer experience.

Operational Efficiency Gains

Altice USA achieved a 2.4% year-over-year improvement in operating expenses, marking the first quarter of such gains in six quarters. This reflects the company’s ongoing efforts to streamline operations and reduce costs.

Broadband Subscriber Losses

The company experienced a loss of 58,000 broadband subscribers in the third quarter, attributed to intense competition and challenging market conditions. This loss highlights the competitive pressures in the broadband market.

Noncash Impairment Charge

Altice recorded a noncash impairment charge of approximately $1.6 billion related to indefinite live cable franchise rights. This charge reflects the evolving competitive and macroeconomic pressures faced by the company.

Revenue Decline

Total revenue for Altice USA declined by 5.4% year-over-year, primarily due to a nearly 10% decrease in residential video revenues. This decline underscores the challenges in maintaining revenue growth amidst shifting market dynamics.

Fixed Wireless and Fiber Competition

The competitive landscape intensified in September, with aggressive offers and increased marketing spend from competitors impacting Altice’s results. This heightened competition is a significant factor in the company’s recent performance.

Forward-Looking Guidance

Looking ahead, Altice USA remains focused on operational efficiency and customer experience improvements. Despite a decline in adjusted EBITDA by 3.6% year-over-year, the company saw a 3.3% increase quarter-over-quarter. Altice reaffirmed its full-year outlook, targeting approximately $3.4 billion in adjusted EBITDA and $8.6 billion in revenue. Capital expenditures are projected to reach $1.3 billion, reflecting ongoing investments in network modernization and expansion. The company aims to evolve its strategies and offerings, prioritizing profitability over subscriber growth.

In conclusion, Altice USA’s earnings call highlighted a complex landscape of achievements and challenges. While the company celebrated record gross margins and mobile revenue growth, it also faced significant hurdles such as subscriber losses and competitive pressures. Moving forward, Altice remains committed to enhancing operational efficiency and customer satisfaction as it navigates a competitive market environment.