Altice USA reported positive third-quarter results, as video losses improved slightly and broadband subscriber additions held steady.
During the three-month period Altice’s Optimum and Suddenlink cable brands lost a combined 28,000 pay TV subscribers, compared to 33,000 in the year ago period. Residential broadband additions of 14,000 were in-line with last year’s gain of 16,000.
Residential ARPU per unique customer increased 2.3 percent year over year to $143, a significant uptick compared to last quarter’s acceleration rate of 0.5 percent, MoffettNathanson analysts noted. Altice said ARPU helped residential revenue grow 2.4 percent year over year.
Overall Altice reported revenues of $2.42 billion, up 4.1 percent, and boosted by increases across its residential, commercial, and advertising segments. Pay TV revenue for the quarter was down 1.4 percent to $1.05 billion, broadband jumped 10.9 percent to $729.9 million, business services revenues of $344.2 million were up 6 percent, and advertising revenue of $123.1 million jumped 37.8 percent year over year.
EBITDA grew 5.8 percent to $1.07 billion, and Altice reported its highest ever adjusted EBITDA margin of 44.3 percent. The company also recorded a net income gain of $32.5 million, compared to a year-ago loss of $192.6 million.
Altice said its initial launch of its home entertainment hub Altice One is complete, and now available to 80 percent of the operator’s footprint. On the network side, Altice CEO Dexter Goei told investors on the company’s third-quarter earnings call that the first objective is to expand 1 Gbps service availability across its service area. While Altice is following a fiber-to-the-home strategy, for the time being the company plans to deliver gigabit speeds in its Optimum footprint via a DOCSIS 3.1 upgrade on its HFC network.
“The reason why we’re doing one 1 gig DOCSIS 3.1 is really to plug the hole in our product roadmap for the next couple of years, as we roll out fiber-to-the-home across the entire footprint on Optimum,” Goei said. “So we don’t want to be in a situation, where we’re not being able to provide 1 gig as the speed requirements from our customers continue to grow quarter over quarter.” He noted that 80 percent of gross additions are now opting for at least 200 Mbps speed tiers.
The company first announced plans for its FTTH network roll out in November 2016, and on the call Goei said Altice is still driving for its five year goal to cover its Optimum footprint. Goei said he expects to see “a significant acceleration” of FTTH rollout going into 2019, though noted it may take an extra year or so to complete the last 10-20 percent of the footprint, mainly due to permitting processes associated with local communities.
Executives said Altice is also still on track to launch a mobile service in 2019. Goei reiterated that the company’s “full MVNO” agreement with Sprint differentiates it from those with “light” MVNO agreements, as it gives Altice ownership and control over more aspects, excluding spectrum and base stations.
“We are getting ready to operate almost like an MNO and will provide a great value proposition to our customers and the market,” Goei said.
Altice has also been conducting tests in the CBRS band.