Altice USA CEO Dexter Goei verified reports that the operator is exploring a sale of its Suddenlink assets in response to inquiries from several parties interested in striking a deal. While it is considering a transaction to generate value for shareholders, he stressed its Optimum footprint is not on the table and the operator has no interest in exiting the U.S. market.
On the operator’s Q2 202 earnings call, Goei said it has received “a lot” of inbound interest in its Suddenlink holdings. He added the timing is right for deal talks, given Altice plans to begin ramping fiber buildouts in its Suddenlink footprint in 2023. The operator previously laid out plans to push fiber to 200,000 locations in its Suddenlink territory in 2022, before increasing that figure to 600,000 locations in 2023, 900,000 in 2024 and 800,000 in 2025.
It’s “a good time for us to pause here and look for potentially significant accretive transactions for shareholders before we embark on a big upgrade,” Goei explained. “So, it’s the right time for us to be looking at this given where we are in our capital deployment timeframe.”
Asked why Altice pressed ahead with the rebranding of its Suddenlink assets earlier this month, Goei noted it is entirely possible that the deal talks could come to nothing. He added that it will continue to run the Suddenlink business as usual until it doesn’t have to.
In response to another question about whether a Suddenlink sale might mean Altice is giving up on the U.S. market, Goei said he doesn’t believe looking for an accretive deal amounts to throwing in the towel.
“I have not suggested in one ounce of my commentary that we’re thinking about selling the Optimum footprint,” he responded, adding Altice views Optimum as a strategic asset going forward. “If you look at the history of the investments of the group globally, we’ve never really exited countries. But you have to adapt to the topography that you’re dealing with and the competitiveness that you’re dealing with and the players and try to maximize shareholder value any way that you can.”
Consolidated revenue fell 2.1% year on year to $2.46 billion, while net income plunged 46% to $106.2 million.
Altice USA added 23,000 fiber subscribers in the quarter, up from 11,000 the year prior, but it lost a total of 40,000 broadband customers overall. Goei said the operator has seen different gross add trends within its different footprints. While activity is down as a whole, he noted it is still seeing “robust” gross adds in its Suddenlink territory and a slower pace in its legacy Cablevision footprint. He added churn is “stable” in its Eastern markets but “a lot higher” in its Western footprint due to increased competition from fiber overbuilders and fixed wireless access players.
Goei expressed confidence in Altice USA’s strategic plan and its ability to return to broadband growth. The key question, he said, is when exactly that will happen. “We have been expecting to see that in the second half of this year. I still think that we still can see it in the second half of this year,” he said. We continue to see good improvements from an operational standpoint here that we see and expect to bear into fruition positive net adds in the second half of this year hopefully.”