Altice USA is preparing to duke it out with Verizon Fios in the New York tri-state area, with executives outlining a plan to expand fiber to 1 million new locations in 2022 after losing thousands of broadband subscribers in Q3.
During an earnings call, Altice CEO Dexter Goei said internal statistics show the company is primarily seeing market pressure where its Optimum offerings compete with Fios. Outside of that, he said its products are experiencing growth levels similar to those seen in 2018 and 2019.
“We think that building fiber puts us in a superior network position relative to them. They are up and down just under 1 gig on their existing fiber, to what effectively is fiber to a coax termination. They need to fix their fiber to the coax termination if they want to go to higher speeds and we’re going to be 10-gig ready effectively by the second half of next year across our fiber footprint and have a longer runway here,” he said. “We’re repositioning ourselves to be able to duke it out on an equal – if not a better – product portfolio going forward.”
The operator’s broadband footprint currently covers 9.2 million locations across 21 states, with the majority of passings coming from its hybrid fiber coaxial network. Goei said it currently has 1.26 million fiber passings and is on track to reach 1.5 million by the end of 2021. It is targeting the addition of 1 million new fiber passings in 2022, primarily in Fios areas.
It is aiming to add another 1 million to 1.5 million passings by the end of 2023 to increase its total fiber footprint to 3.5 million to 4 million locations, with all of the Fios overlap footprint covered, Goei noted.
Altice is already beginning to ramp its fiber marketing in the tri-state area and “that will only intensify over the next 12, 18 months as we continue to grow to critical mass,” he said.
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In addition to building fiber, Goei said the operator is investing in improvements to its sales channels and customer care capabilities and is revamping its product portfolio to be more competitive. In terms of work on the latter, Goei pointed to Altice’s recent rollout of new flexible broadband packages and stated a new converged mobile offering is due out early next year.
Analysts at New Street Research said of Altice’s new plan “the big risk is half measures. If mgmt. doesn’t go far enough on pricing, subscriber growth will be a constant struggle as it has been for the last couple of years (excluding the pandemic)…This is their chance to make all the tough decisions that they have avoided for a couple of years.”
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The operator lost 13,100 broadband subscribers in Q3, compared to a gain of 26,000 in Q3 2020. The loss was less than the 15,000 to 20,000 subscribers Goei previously predicted it would shed in the quarter. Thus far in Q4, Goei said October’s figures were in line with 2018 and 2019, and November’s initial figures seem to be following the same path.
Consolidated Q3 revenue of $2.57 billion was up 5.8% year on year, with net income jumping to $266.9 million compared to a net loss of $4.7 million in the year-ago quarter.