Altice USA executives put a positive spin its second quarter, touting it as one with stabilized broadband losses and lower capital spend.CFO Mark Sirota noted its broadband losses improved year on year “for the first time in five quarters.”
The operator's Q2 broadband net losses were 37,000, compared to 39,000 losses in the year-ago quarter.
On Wednesday’s earnings call, Sirota added Altice is continuing to stabilize average revenue per user (ARPU) declines. Residential ARPU of $137.44 grew sequentially “through disciplined acquisition pricing, broadband speed up-tiering and retention segmentation,” but declined 2.8% year on year.
Altice this quarter launched an 8-gig service tier for its Optimum East footprint, making it available in 1.7 million locations. The operator also offers 2-gig and 5-gig speed tiers, which were introduced in 2022.
“On the broadband ARPU piece, we’re just getting our feet under us in terms of starting to sell gig and multi-gig in a more meaningful way,” said CEO Dennis Mathew. He noted Optimum Complete, Altice’s recently launched internet and mobile bundle, “is helping us in that regard.”
On the fiber front, Altice added 287,000 new fiber passings in Q2, compared to 270,000 in the year-ago quarter, bringing its total to nearly 2.7 million.
The company previously stated plans to reach 900,000 new passings by year-end, but an ongoing corruption probe targeting Altice Portugal – which resulted in the departure of Altice USA Chairman Alexandre Fonseca – is hindering its fiber expansion efforts. It’s now expecting to pass at least 600,000 homes with fiber in 2023, with fiber capital expenditures set to come in about $100 million to $200 million below the company’s initial guidance.
Mathew, who has taken on Fonseca’s role in addition to his responsibilities as CEO, said Altice USA is undertaking its own internal investigation, which in turn led the company to replace its chief procurement officer.
“We’re currently reviewing our supplier and vendor relationships and proactively pausing some capital spend until we have completed our investigation, which will impact our fiber construction targets in the short-term,” he said.
Analysts at New Street Research are skeptical that the company’s issues in Portugal are impacting U.S. fiber deployments.“Whether the actual cause is investigations or capital preservation, slowing capex makes sense in light of current leverage and credit market conditions,” they wrote.
All told, Altice ended Q2 with 250,000 fiber customers and 4.6 million total broadband subscribers.
Financials
Consolidated revenue of $2.32 billion was down 5.6% year on year, which included declines across Altice’s Residential (5.7%), Business Services (1.9%) and News and Advertising (14.8%) segments.
Net income attributable to Altice USA shareholders dropped from $106.2 million in Q2 2022 to $78.3 million. Capital expenditures of $473.4 million were down 2.4% YoY, and represented roughly 20% of overall revenue.