Altice USA Q3 Earnings Call: Progress Made with a Focus on Fiber Growth

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Altice USA Q3 Earnings Call: Progress Made with a Focus on Fiber Growth

Altice USA (NYSE: ATUS) reported a noteworthy quarter in Q3 2024 with operational improvements and strategic growth in its fiber customer base. CEO Dennis Mathew emphasized the company's commitment to enhancing customer experience and operational stability, resulting in a reduction in operating expenses and an increase in fiber and mobile customer numbers.

Despite a decline in total revenue and residential revenue, the company's mobile services revenue showed significant growth, and Altice USA maintains a strong liquidity position with no debt maturities until 2027.

Key Points

  • Altice USA reported $2.2 billion in revenue and $862 million in adjusted EBITDA for Q3.
  • Since Mathew took office, the company has reduced operating expenses by $500 million.
  • In Q3, 47,000 new fiber customers were added, bringing the total to 482,000.
  • Mobile services grew by adding 36,000 new lines, reaching a total of 420,000.
  • Altice aims to increase its fiber customer base to over 1 million by the end of 2026 and enhance gross margins to approximately 70%.
  • The company expects to reach 500,000 fiber customers by the end of 2023, with a long-term goal of exceeding 1 million by 2026.
  • Residential mobile services revenue increased by 50%, but residential revenue declined due to video subscriber losses.
  • Altice USA generated $77 million in free cash flow in Q3 and has a strong debt maturity profile with no maturing debt until 2027.

Company Outlook Altice USA is focused on expanding its fiber and mobile subscriber bases, aiming to surpass 1 million customers in each segment by the end of 2026 and 2027, respectively. Improvements in operational efficiencies and enhanced programming agreements are expected to raise gross margins to approximately 70% by 2026. The company is committed to community support and enhancing its networks, particularly in response to Hurricane Helene in North Carolina.

Negative Highlights Total revenue declined by 3.9% year-over-year in Q3, while residential revenue decreased by 5.6%. The quarter saw a net loss of 50,000 broadband subscribers.

Positive Highlights The addition of 47,000 fiber customers and 36,000 mobile lines in Q3 demonstrates robust growth in these areas. Residential mobile services revenue increased by 50%, indicating significant expansion potential.

Underperforming Areas Despite growth in fiber and mobile customers, the company experienced declines in both total and residential revenue.

Q&A Highlights Mathew discussed new product launches, including Total Care and Whole Home Wi-Fi, aimed at improving customer experience and ARPU. The company is optimistic about fiber network expansion, with 70% of net additions coming from fiber migrations in the most recent quarter. Altice USA is open to value-adding merger and acquisition opportunities, though there are currently no announcements.

Altice USA continues to navigate a competitive environment with a focus on operational excellence and the evolution of its market strategy. Efforts to enhance customer service, introduce new product offerings, and expand its fiber network are central to its long-term growth strategy and shareholder value.

With a robust liquidity position and a commitment to reducing capital expenditures, Altice USA appears ready to continue making progress in the dynamic telecommunications market.

InvestingPro Insights Altice USA's (NYSE: ATUS) recent earnings report highlighted operational improvements and strategic growth in its fiber customer base, aligning with several key insights from InvestingPro.

According to InvestingPro data, Altice USA's market capitalization stands at $1.67 billion, reflecting its position in the competitive telecommunications market. The company's trailing twelve-month revenue, as of Q2 2023, was $9.11 billion, with revenue growth at -2.88% during the same period. This data corroborates the reported decline in total revenue in the Q3 earnings report.

One InvestingPro Insight indicates that Altice USA's stock price movements are quite volatile, as evidenced by its recent performance. The stock has shown a substantial return of 50.58% over the last three months and 30.81% over the last six months. This positive momentum can be attributed to the company's operational improvements and growth in high-value segments like fiber and mobile services.

Another relevant InvestingPro Insight notes that analysts expect the company to be profitable this year, which aligns with CEO Dennis Mathew's focus on enhancing customer experience and operational stability, leading to a reduction in operating expenses and an increase in fiber and mobile customer numbers.

It is essential to note that InvestingPro offers eight additional insights for Altice USA. These insights provide investors with a comprehensive analysis of the company's financial health and market position, which could be particularly valuable given the evolving strategic landscape of the telecommunications sector.