Altice USA notched its best ever quarter for broadband subscribers additions in the first quarter, according to CEO Dexter Goei. Altice added 50,000 broadband subscribers in the quarter as well as an additional 9,000 subscribers for its Altice Advantage tier, which is its low-income family broadband program.
Driven in part by voluntary speed and rate increases, Altice's total broadband revenues in the first quarter increased by 14.2%.
"The pace of voluntary broadband speed upgrades almost doubled in March month-on-month and was our 24% increase in network data usage," Goei said, according to a Seeking Alpha transcript. "To support this ongoing network demand, we accelerated our deployment of 1-Gig speeds, which is now available in more than half of our Optimum footprint and over 75% of the Suddenlink footprint."
Prior to yesterday's earnings call, Altice USA announced that the 1-Gig speeds were available in more than half its New York, New Jersey and Connecticut footprint that were previously owned by Cablevision. Altice said investments and the continued deployment of fiber technologies enabled the 1-Gig speed in those areas.
While work from home and online learning initiatives drove the addition of broadband subscribers in the first quarter, Goei noted that Altice's fiber-to-the-home (FTTH) deployments in the Optimum footprint slowed down due to permitting issues. Due to that slowdown, Altice said its capex for the year would now be below $1.3 billion.
With the build out of DOCSIS 3.1 and fiber technologies, 1-Gig sales were up by 56% in March. Goei said there's plenty of headroom for Altice to grow its faster broadband tiers.
"The average broadband speeds taken by Altice USA’s customer base is now 222 megabits down, more than triple what we saw just three years ago," he said. "But more importantly, about two-thirds of our base still only takes 200 megabits or less. That’s about 2.8 million subscribers that we are certain will upgrade over time.
Goei said the 1-Gig sell-in rate was 13% of all gross additions in areas where it was available.
"Increasing 1-Gig availability to the rest of Optimum’s footprint through the rest of 2020 increases our opportunity to continue to upsell higher broadband speeds," he said. "And we are still on track for commercial launch of bundled fiber offerings later this year. Our long-term fiber-to-the-home opportunity will allow us to deliver even faster speeds to our customers with significant opportunities for additional capex and opex savings.
"In summary, we remain very optimistic about our core connectivity business."
While broadband was a highlight for Altice, it lost 42,000 video subscribers in the first quarter compared to a loss of 30,000 in the same quarter a year ago. Altice emerged from the first quarter with approximately 3.14 million residential video customers.
Altice added 41,000 lines for its mobile service that uses its own Wi-Fi hotspots as well as Sprint's network through an MVNO agreement.
The company’s consolidated revenues grew 2.2% year-over-year to $2.45 billion while adjusted EBITDA was flat at $1.03 billion. While COVID-19 had an impact on Altice's SMB sector, business services revenue increased by 4%, and news and advertising revenue was up by 11.4%.
"As an organization, we are well positioned giving the increasing reliance in our networks and services which has been performing very well," Goei said. "There are though some uncertainties around our SMB and advertising businesses, as many of our peers have highlighted as well. For that reason, we intend on providing an update on the outlook for revenue and EBITDA expectations later this year as we gain more visibility."