Altice USA reported lower first-quarter earnings as the cable MSO continued to shed broadband and video customers, while building its mobile and fiber businesses. 

New York-based Altice USA lost 51,000 Optimum Fiber Internet residential broadband customers in the quarter, on top of the 29,300 lost in Q1. A year ago it lost 37,000 broadband customers. Altice USA finished the quarter with 4.09 million residential broadband customers.

The company also lost 72,800 residential video customers, leaving it with 2.02 million Optimum pay TV subscribers. In Q1, it lost 77,700 video customers.

Altice said it added 40,000 fiber customers in the quarter giving it a total of 434,000, a 74% increase from a year ago. Fiber penetration reached 14.3%, up from 9.4% a year ago.

Optimum Mobile lines rose by 33,000 in the quarter.

Net income dropped to $15.4 million, or 3 cents a share, from $78.3 million, or 17 cents a share, a year ago.

Revenue fell 3.6% to $2.2 billion.

Residential revenue was down 4.4% to $1.8 billion. Business services revenue rose 1.3% to $369.3 million. News and advertising revenue dropped 7.2% to $105.3 million.

“In the second quarter our company achieved significant improvements in operational metrics and customer satisfaction, growth in our fiber, mobile, and B2B businesses, and continued stabilization of ARPU across our base,” CEO Dennis Mathew said.

“We elevated product and network quality, introduced refreshed go-to-market strategies, which are starting to gain traction, and launched Entertainment TV, Optimum’s new low-cost internet TV package available exclusively on Optimum Stream, providing more choice and flexibility for customers,” Mathew said. “Looking ahead, we have an innovative roadmap of future product and experience enhancements that we are eager to bring to current and prospective customers this year and beyond, and we remain focused on advancing network and service quality, driving profitable customer relationships, and maintaining financial discipline.”

Altice USA said it signed a multiyear extension of their distribution agreement with Gray Media that will keep Gray’s TV stations available to Altice USA’s Optimum TV subscribers.

One of the markets covered by the new deal is Phoenix, where Gray recently acquired rights to air basketball games played by the Phoenix Suns of the NBA and the Phoenix Mercury of the WNBA,

Financial terms were not disclosed.

In addition to Arizona, Optimum carries Gray stations in Connecticut, North Carolina, Texas, Louisiana, Kansas, Arkansas, West Virginia, California, Missouri, Arizona, New Mexico, Oklahoma, Kentucky, Mississippi, Nevada, and Ohio. 

Altice USA quietly introduced its Optimum Stream device three years ago, allowing its broadband customers who don't take linear TV services a $5-a-month, Android TV-powered gadget that lets then stream Netflix, Disney Plus or whatever else is available in the Google Play Store. 

On Thursday, the New York-based cable operator announced an expansion to the Optimum Stream platform. 

First, there will be more access. Already situated in the legacy Cablevision Systems footprint of New York, Connecticut and New Jersey, Optimum Stream will now be available in 1.5 million additional homes situated in Western “Suddenlink” territories including Arkansas, Arizona, Louisiana, North Carolina and Texas.

There will also be more content.

While more than 50 free FAST channels have been available via the Optimum Stream and Suddenlink Stream apps, a new $30-a-month virtual MVPD, Entertainment TV, including more than 80 live channels is now available for the platform. 

Channels included with Entertainment TV include A&E, AMC, Comedy Central, Discovery Channel, Food Network, Game Show Network, Great American Family, Hallmark, HGTV, Lifetime, Nickelodeon, Paramount Network, TLC and We TV.

Entertainment TV customers will also have access to local news content from Optimum’s News 12 service, the hyperlocal news source focused on the New York tri-state area.

With the loss of another 78,000 customers in Q1, Altice USA finished March with just 2.1 million remaining pay TV souls. Like many cable operators, the company would prefer to leave linear video behind and focus on bundling internet service with its emerging Optimum Mobile products. 

“Optimum is focused on providing superior customer experiences at every touchpoint — backed by a world-class network and product set — and putting our customers at the center of everything we do. This launch demonstrates our commitment to further enhancing the Optimum TV offering and bringing customers innovative TV packages that satisfy their unique viewing habits,“ Leroy Williams, chief growth and innovation officer at Optimum, said in a statement. 

Faced with a fateful upcoming court date at the end of July, bankrupt Diamond Sports Group has a fresh new distribution worry.

Eleven of its 18 remaining Bally Sports regional sports networks have been blacked out on Altice USA’s Optimum cable TV systems, which reached 2.09 million remaining pay TV customers as of the end of March. 

Also read: Everything You Need To Know About the Bally Sports Bankruptcy

“We have worked diligently and championed on your behalf to reach a fair agreement, offering flexible and consumer-friendly options to Diamond Sports Group, the operator of Bally Sports Networks; however, Bally’s declined. As a result, their content is no longer available on our lineups,” Altice USA says on a website intended to inform customers of the carriage dispute. 

Notably, on this page, Altice directs bereaved baseball fans to the Bally Sports Plus direct-to-consumer streaming service and the Fubo virtual MVPD. The company also has a phone line to help customers talk through solutions. 

Diamond released its own statement: “It’s disappointing that Altice has chosen to stop airing our channels, and we regret that fans are impacted. We have been engaged in negotiations with Altice with the goal of reaching a fair agreement for Optimum’s continued distribution of the Bally Sports regional sports networks. Unfortunately, Altice has rejected multiple proposals with terms similar to what other distributors have already agreed to while demanding carriage on a premium sports tier that would require fans to pay more to retain access, demonstrating they are unwilling to let their subscribers enjoy broadcasts of their favorite teams.”

Diamond, which is seems out of room for delay and must present a viable plan to move forward on July 29 to a Houston bankruptcy, touts that it has locked up distribution with 10 of the 12 largest U.S. pay TV operators, and is reaching 84% of U.S. pay TV subscribers. 

Of more pressing concern is its impasse with Comcast — since April 29, all 18 Bally Sports channels have been blacked out on Xfinity-branded cable TV systems reaching around 14 million subscribers. 

Some of the channels impacted in the Altice USA dispute span numerous cable franchise regions and are blacked out by Comcast as well, such as Bally Sports South, the RSN home of the Atlanta Braves. 

Here are the 11 impacted channels:

• Bally Sports Arizona
• Bally Sports Extra
• Bally Sports Great Lakes
• Bally Sports Kansas City
• Bally Sports Midwest
• Bally Sports New Orleans
• Bally Sports Ohio
• Bally Sports Oklahoma
• Bally Sports South
• Bally Sports Southeast
• Bally Sports Southwest
• Bally Sports West

In its messaging to customers, Altice USA concedes, “Fortunately, there are various options available for you to continue watching your favorite Major League Baseball teams.” And that’s true. Bally Sports channels are carried by nationally distributed services like DirecTV satellite TV and DirecTV Stream, as well as virtual MVPD Fubo. 

Altice USA said it is renaming a4, its advanced advertising and data unit, as Optimum Media, bringing its branding in line with its pay TV, broadband and mobile phone businesses.

Optimum Media offers data-driven multiscreen advertising campaigns that reach all markets in the U.S., including the 21 states in which Altice provides its other Optimum services.

“Optimum Media is excited to align our advertising business with the Optimum connectivity brand, which we believe will help elevate awareness, accelerate partnership opportunities for businesses looking for both advertising and connectivity services, and importantly bring even more value and innovation to our clients,” Keith Bowen, president of news, advertising, and programming at Altice USA, said. “By tapping into the power of Optimum and becoming Optimum Media, we are unlocking endless potential and opportunities to continue to drive the incredible results our clients know us for.” 

Optimum Media also sells ads on News 12, the company’s hyper-local news channel. 

Altice USA reported a loss of both video and broadband subscribers, resulting in red ink for the first quarter.

The company had 30,000 fewer Optimum broadband subscribers than in the prior quarter, compared to 19,000 net disconnects a year ago. The company finished the quarter with 4.1 million broadband subscribers.

In video, 78,000 customers cut the cord, the biggest loss in at least a year, leaving 2.1 million pay TV subscribers. Video losses accelerated from a year ago, when Altice lost 59,000 subscribers.

That left Altice USA with a $21.2 million loss for the quarter, or 5 cents a share, compared to net income of $$25.9 million or 6 cents a share a year ago.

Revenue fell 1.9% to $2.3 billion.

On the plus side, residential revenue per user (ARPU) increased 0.3% to $135.67 and business services revenue was $364.9 million, up 0.3%. News and advertising revenue rose 7.1% to $105.7 million, Excluding political ad revenue, news and advertising revenue was up 1.8%.

Customer-service calls were down by 1.7 million and the company had 235,000 fewer truck rolls.

"Our first-quarter results are reflective of the progress we are making to improve our operations and financial performance, which we are confident will set us on a path to achieve sustainable long-term growth,” CEO Dennis Mathew said.

“We are delivering quality and value to our customers by strengthening our networks, improving our execution discipline, enhancing our product portfolio, and accelerating local go-to-market strategies, and we are proud to once again report growth in our fiber and mobile customer bases alongside continued improvement across key operational and customer experience metrics,” Mathew said. “Our focus remains on driving profitable customer relationships and elevating network and service quality, all while maintaining financial discipline.”

Altice USA is launching a new campaign for its Optimum brand of broadband and cable services that uses the slogan, “Where local is big time.”

The new slogan highlights Optimum’s local focus and tech capabilities, the company said. 

“As a local provider of critical connectivity services, Optimum cares deeply about the vitality, happiness, and lasting success of the local communities we serve, not just because they are our customers, but because they are also our employees, neighbors, friends, and family,” David Williams, president of consumer services at Optimum, said. “We know how much our communities rely on us to stay connected, so how we show up for them matters to us. That’s why it is important our brand reflects our customer-first ethos and reinforces our local commitment combined with our ability to deliver world-class connectivity at a great value today and into the future.”

The campaign will target residential customers and businesses across Optimum’s service areas on TV, video, social media, radio, streaming audio, out-of-home and digital display.

Also Read: Altice USA Stock Perks Up in After-Hours Trading as Cable Company Meets Q4 Forecasts

The two “hero” ad spots highlight the role Optimum plays in ensuring that people and businesses stay connected.  Every ad is anchored in reaching customers where they are — in the communities where they live and work — and will be seen in markets across Optimum’s 21-state footprint.

“ ‘Where local is big time’ isn’t just a tagline — it reflects how we operate at Optimum and marks a significant moment centered around our ability to deliver connectivity services with big-tech capabilities in a simplified way that meets the specific needs of our markets and customers,” Optimum chief marketing officer Jennifer Garrett said. “Now, we are more poised than ever to reach our customers where they are and ensure that everything we’re driving locally, regionally, and nationally resonates with the communities that we call home.”

Altice USA said Optimum has introduced a new regional operations model with local senior leadership teams, enhanced customer communications, launched a suite of connectivity products and upgraded its broadband networks.

The campaign was put together with Publicis O1, a dedicated team of people from Publicis Groupe Agencies working on Optimum.

While Fubo has sued the so-called Spulu, with its CEO calling the sports streaming joint venture “borderline racketeering,” Dennis Mathew, chief executive for New York-based cable operator Altice USA, seems interested in distributing the bundle. 

“We’ve got to wait and see where the dust settles,” Mathew said Monday at a Morgan Stanley Technology, Media and Telecom Conference. “I know things are still forming, but we want our linear customers to have access to these types of solutions.” (You can access a replay of the event here.)

“And so how do we do that in a way that’s a win for the customer, a win for the programmers and a win for us?“ Mathew added. “I don’t think we’re there yet. Those conversations are not happening at the right level. And so those are some of the conversations we’re pushing to have in the near term.” 

In early February, Disney, Fox and Warner Bros. Discovery announced a plan to bundle their linear sports channels in a virtual MVPD-like product, with analysts predicting a price point of around $50 a month. 

Altice USA has saw its rate of video cord-cutting accelerate to nearly 11% in 2023. It ended the year with just 2.172 million remaining pay TV customers. So Mathew is open to trying new things. 

Also read: For U.S. Pay TV, 2023 Was a Transformational Year (Chart of the Day)

Speaking at the Morgan Stanley event, Mathew said Altice USA would move to expand its Android TV-based Optimum Stream product to its rural Suddenlink-spawned markets. 

The Optimum Stream device not only supports Altice USA’s pay TV app, which is also playable on iOS and Android, but also popular OTT apps including Netflix and Disney Plus. 

 It’s “pivotal to make it available to all of our customers,” Mathew said. “We do know that video is the No. 1 product consumed on broadband ... We need to have the right solutions to make sure they can consume any way they want.”

Also read: A Potential Altice USA Purchase 'Makes Sense' for Charter, But Comcast Should Kick the Tires, Too, Analyst Says

The Altice USA CEO also addressed last week’s Bloomberg report suggesting Charter Communications might buy his company. 

“I don’t speculate on what other companies may or may not be doing,” Mathew said. “My No. 1 focus is to drive maximum positive impact for our teammates, our customers and communities we serve and our shareholders by accelerating this transformation.”

New Street Research equity analyst Jonathan Chaplin responded positively to a Bloomberg report Monday that Charter Communications is in private talks to possibly acquire devalued cable operator Altice USA, saying the two MSOs' regional footprints in New York, Connecticut and Massachusetts and  "would fit well together."

But in a note to investors, Chaplin also said it would be "irresponsible" for Comcast not to also take a look at struggling Altice USA. 

"We would put the probability that Comcast has discussions with Altice at very high. We would put the prospect of a competing bid, if any of this turns out to be true, much lower," Chaplin wrote. 

Also read: Altice USA CEO Dennis Mathew: Struggling Cable Operator Is Learning to Compete Against Fixed Wireless

Chaplin also said it would make sense for T-Mobile to also take a run at Atlice USA, although he doesn't believe the wireless company's counteroffer prospects are as good as the one Comcast could render. (Fierce Wireless and Light Reading first reported on Chaplin's note.)

Altice USA has been trading at only a small fraction of its 2021 peak share price of nearly $40. But shares have spiked nearly 62% since Bloomberg's report. 

None of the aforementioned companies have publicly commented on the M&A reports

“The industrial logic of putting Altice together with Charter or Comcast is powerful," Chaplin wrote. "It is slightly more powerful for Charter than it is for Comcast. The integration costs would be very high for both companies, and both are very aware of these costs. The leverage makes the deal very difficult, given the magnitude of the integration costs.”

During Comcast's Q4 earnings call in January, chief executive Brian Roberts tried to throw cold water on any M&A speculation. 

“While there may be speculation what we could do next, I’d like you to hear it directly from me,” Roberts said. “I love the company we have. So the bar continues to be even higher for us to do anything other than the plan you heard today.” 

Altice USA stock jumped 40% to $2.63 a share Monday after a report indicated Charter Communications was considering a bid for the New York-based cable operator.

The shares were up more than 50% in earlier trading.

The acquisition would give Charter a bigger hold on the New York metropolitan market, Bloomberg noted.

Charter’s stock was down 2% to $292 a share. Charter had no comment on the report.

Cable stocks have been hurt by competition from wireless broadband providers on top of the longer-term trend of cord-cutting weakening their TV business.

Earlier this month, Altice reported a net loss of $117.8 million for the fourth quarter and a $53.2 million loss for all of 2023.

Total revenue for Q4 was down 2.9% to $2.3 billion, and off 4.3% for all of 2023 to $9.24 billion.  

After spiking nearly 6% in regular trading Wednesday, Altice USA’s previously sagging stock price perked up again, by double digits during after-hours business, with the New York-headquartered cable operator reporting fourth-quarter earnings in line with equity analysts’ consensus forecasts. 

Total revenue for Q4 was down 2.9% to $2.3 billion, and off 4.3% for all of 2023 to $9.24 billion. Both decline percentages improved from 2022, when Q4 sales dropped by 6% and full-year revenue by 4.4%. 

Year to date, Altice USA shares still closed regular trading Wednesday down nearly 33% from a Jan. 2 trading price of $3.21 a share.

Altice USA, which recently instituted significant price cuts to its fiber services in hopes of rekindling customer growth, lost 62,200 linear video subscribers in Q4 vs. 52,800 in the fourth quarter of 2022. Residential broadband users declined 27,000 in the quarter vs. 7,000 during the same period of 2022. The company, however, did have its best quarter ever for fiber internet customer additions, tacking on 46,000 subscribers in Q4. 

“In cutting their rack rate pricing, Altice has at least acknowledged the obvious; their prices are simply too high given the challenging competitive backdrop in (especially) their Optimum East footprint,” MoffettNathanson analyst Craig Moffett in a note to investors Wednesday. 

According to Moffett, on a percentage-of-base basis, Altice USA’s broadband customer losses have been among the worst in the cable industry recently. 

The challenge for Altice USA will be to rekindle growth without cratering its broadband average revenue per user (ARPU), which is among the highest in the industry. 

In the minds of the folks like Moffett who advise cable-industry investors, if an MSO isn't growing its customer base, it better be growing ARPU. 

Let’s just say there’s early concern here.

“In resetting their rack rates, the company projected relatively stable ARPU. At least in Q4, however, ARPU fell quite sharply sequentially (by 1.6% in a single quarter),” Moffett noted. 

Currently trading at around $2.50 a share, a tiny fraction of its peak $37.80 share price back in early December 2020, Altice USA is, in the words of equity analyst Craig Moffett, “taking its medicine.”

After years of operational cuts and consumer price increases, the Long Island cable operator, under the direction of recently appointed CEO Dennis Mathew, has instituted fairly massive price decreases across its fiber-to-the-home and cable broadband product lines. 

We're talking about as much as 36% off the base 300 megabits-per-second Optimum FTTH tier. (See chart below.)

Credit Light Reading for following up first on Moffett’s January 8 report — we slept on it, but it's definitely worth mentioning.

The price changes affect all FTTH customers who aren't on promotion, Moffett noted.

“By all accounts, a very high percentage of their accounts are on promotion,” he added. 

Altice USA is also reducing prices for new cable broadband customers, although it appears existing customers can also leverage these prices by threatening to walk. 

According to Moffett, the cable operator, which touts around 4.6 million broadband customers, is trying to undo the aftereffects of the “Altice Way,” the strategy of increasing EBITDA through cost cuts and price increases, which proliferated amid the aggressive expansion set forth by French-Israeli cable titan Patrick Drahi a decade ago. 

“The strategy worked everywhere they tried it. For a while. And then it didn’t,’ Moffett wrote. 

“For the past few years, Altice has been undoing the damage caused by overzealous cost-cutting, adding back much-needed capabilities that were lost in the initial Altice bloodletting,” he added. “What they hadn't done — until now — was undo the damage done by the overzealous price increases that followed.”

During Altice USA's Q3 earnings call late last year, Mathew outlined the coming price changes: "Specifically in 2024, we'll be introducing new lower rate card pricing, a more transparent approach to promo roll-off and a speed gifting program that will bring faster speeds to customers. We'll begin by broadly implementing this new pricing strategy with our next-generation fiber rate card.

"New rate cards on fiber will go into effect in the first half of 2024 and will reduce rates for new and existing customers," he added. "This does not have a notable impact on revenue as a very small portion of our fiber customers are close to paying full rate. New rate cards on HFC will also be available in 2024 to new customers, and legacy HFC customers will move to new rate cards over time through speed tier adjustments to match existing customer prices, preserving revenue."

Altice USA is in talks to sell digital platform Cheddar News to Los Angeles-based private equity company Regent, CNBC reports.

Reached via email, an Altice USA press rep told Next TV that the No. 4-sized U.S. cable company "doesn't comment on rumors and speculation." But it had already been reported back in July that the MSO had hired Goldman Sachs to explore strategic options for Cheddar News, which Altice USA acquired in 2019 for $200 million. 

Also read: Altice USA CEO Dennis Mathew: Struggling Cable Operator Is Learning to Compete Against Fixed Wireless

According to CNBC, Altice USA and Regent are discussing various cashless transaction formats. One, called an “earn out,” wouldn't include any initial cash payments by the private equity firm. Rather, Altice USA would receive payments that could total around $50 million based on certain performance goals being met. 

Altice USA has seen its market capitalization drop below $1 billion as its stock price approaches $2 a share vs. an all-time high of nearly $38 back in December 2020. In those halcyon pandemic days, growth in cable broadband — Altice USA's core business —was exploding. 

These days, the cable provider is losing broadband customers — nearly 87,000 of them through the first nine months of 2023.

Under CEO Dennis Mathew, who took over for Dexter Goei last year, Altice USA has initiated a turnaround strategy, primarily focused on improved sales execution of existing core connectivity products, while ditching assets that are not core to its business model. 

As for Cheddar News, it was founded as a multiplatform-focused digital news provider targeting younger consumers by former BuzzFeed executive Jon Steinberg, who now serves as CEO for Next TV's parent company, Future plc.

Also Read: Goei: Cheddar Buy Not a Signal of More Deals to Come

With content migrating off the pay TV grid and onto newer distribution platforms, notably free ad-supported streaming, Cheddar offered Altice USA an innovative model that would help it evolve its video business. 

For its part, however, Altice USA is in now in a position where its focus is entirely on rekindling growth in its core internet connectivity businesses. 

Altice USA’s share price on Wall Street is down more than 55% so far this year — including nearly 5% on Tuesday. And the cable operator has lost nearly 87,000 home broadband customers through the first three quarters of 2023 as T-Mobile and Verizon have jointly added around 2.7 million fixed wireless access subscribers. 

But speaking at a UBS TMT conference Monday, Altice’s (relatively) new CEO, Dennis Mathew, said his struggling cable company is beginning to compete more effectively against FWA for customers.

“Fixed wireless remains a competitor across our footprint wherever it’s available,” Mathew said. “Availability is really tied to the capacity they have on the network, but they market broadly and then they have to adjust based on where the sales are happening. ”

Mathew said Altice USA experienced a 4% improvement in ”win share“ — a term borrowed from baseball sabermetrics to describe progress in head-to-head competition — against FWA opponents. The improvement, he said, is coming not through upgrades of Altice’s fiber or DOCSIS 3.1 offerings — products he remains “bullish” on as they are — but from better ”execution“ of sales strategy. 

“I think that’s due to two things,” he added. “One is just stronger sales channel performance. As I mentioned, we’ve brought in new sales channel leaders — a new leader of inbound sales, a new leader of direct sales and a new leader of [business-to-business]. Across the board, we’re seeing better performance management. On B-to-B, we're seeing a stronger sales culture, which is yielding a better conversion and better productivity. And then we're going on the offensive a bit in our marketing, as well. We have a story to tell fixed solutions vs. fixed wireless — we have a great product and great value. And that’s helping us make progress.”

Mathew said that more than 60 new VP-and-above-level executives have been hired since he took over for Dexter Goei in September 2022. 

He described Altice USA as still being in the “early innings” of an overall turnaround that he believes will boil down to just simple business execution across channels. 

“Fourteen months later, we have vastly more capabilities,” Mathew said. “To be able to drive or more effectively go to market. To be able to deliver higher quality. To be able to manage our base more effectively. But yes, there is more work to do.”

Altice USA’s Optimum brand named executives to senior positions as part of a new leadership structure.

Michael Parker was named president, business service; David Williams becomes president, consumer services and Leroy Williams was tapped as chief growth & innovation officer.

Optimum said its new structure creates dedicated consumer and business services divisions and puts an emphasis on innovation.

“Optimum continues to make steady progress on our mission to be the connectivity provider of choice in every community we serve as we drive improved operational and customer experience metrics across the board. Creating dedicated Consumer and Business Services teams as well as doubling down on innovation best positions us to accelerate our initiatives, strengthen our operations, meet customer needs, and return to growth,” said Altice USA CEO Dennis Mathew.

Parker joins Optimum from Comcast where he was regional senior VP of the company’s Beltway division.

David Williams joined Optimum earlier this year as chief revenue officer from Comcast, where he’d been chief marketing officer for the company’s largest cable division.

Leroy Williams joined Optimum as chief growth officer in 2023 from Samsung Electronics America, where he had been chief product officer.

Altice USA CEO Dennis Mathew used the opportunity of his company's Q3 conference call with equity analysts Wednesday to throw his support behind the groundbreaking carriage renewal deal carved out in September by Charter Communications and Disney. 

“The model is broken,” Mathew said. “I just have to say, for the last 10 years, the consumers have made it clear that there is a significant shift from linear to streaming, and yet the costs for linear have continued to rise. And we as distributors need to find a way to work with our programming partners to put the customer at the center. We need to give them great value.” 

Mathew made his comments as Altice USA was reporting the loss of another 77,600 linear video customers in Q3, vs. 84,000 in the third quarter of 2022. Altice USA has just over 2.3 million remaining pay TV subscribers. 

“We need to give (subscribers) the right content,” Mathew added. “As we look at these programming deals, we’re bundling in content that basically nobody wants to watch, along with the content that consumers actually want to watch.”

Moving beyond video, Altice USA continued to see its core business, wireline broadband, retrench, but at a lower rate, losing 31,000 customers in Q3 vs. a year-ago comparable performance of 43,000 lost high-speed internet souls. 

The company did report 45,000 net fiber additions in the third quarter, as well as 24,000 new Optimum Mobile lines. 

Total revenue for the quarter was $2.32 billion, down 3.2% year over year.

Altice USA said Jennifer Garrett was named chief marketing officer for its Optimum brand, a new post at the company.

Garrett had been head of marketing for the business-to-business division of Charter Communications.

In her new post, Garrett will be responsible for the Optimum brand and value proposition, while acquiring customers and amplifying awareness of Optimum products across all business channels. She will report to Leroy Williams, executive VP, chief growth officer.

“We are thrilled to have Jennifer, with her over 20 years of experience leading brand, marketing, media, and customer base management in the telecommunications industry, officially join the Optimum team,” Williams said. “She is an exceptional leader and innovator with a proven track record of building top-performing teams and bringing businesses to new levels. We are on a journey to make Optimum the connectivity provider of choice and I am confident that under her leadership, our teams will be best positioned to help propel the business forward and advance the Optimum brand in every community we serve.”

Before Charter, Garrett spent more than a decade at Cox Communications in a variety of sales and marketing roles.

“I am honored to have the opportunity to lead Optimum’s best-in-class team to help elevate the brand, enable deeper loyalty, and drive growth among both new and existing customers,” Garrett said. “With Optimum’s powerful suite of connectivity products and services, I am excited to bring my insight-led and consumer-focused approach to the company and drive greater awareness around the brand and deliver continued growth.”

Former New York Yankees star Derek Jeter is featured in a new advertising campaign for Altice USA.

The campaign is for Optimum Complete, which the company is billing as the GOAT, or “Greatest Offer of All Time.”

In the commercial, Jeter thinks when people in an Optimum store are whispering about The GOAT, they’re talking about him.

“It’s been a lot of fun partnering with Optimum on their latest Optimum Complete campaign,” Jeter said. “Not only was it great to see their focus on providing the best bundle options for the consumer, but this experience also was a first for me: working with a real goat!”

Optimum Complete is a bundle of Optimum Internet and Optimum Mobile that starts at $45 a month.

“We are thrilled to launch our new marketing campaign celebrating Optimum’s greatest offer of all time — the GOAT — alongside sports legend Derek Jeter,” said Leroy Williams, chief growth officer at Optimum, said. “Optimum Complete combines our most powerful connectivity products — internet and mobile — to make life easier for our customers and unlock big savings for them each month, and we couldn’t be happier to work with Derek to bring this campaign to life. Now, customers have the chance to see Optimum’s newest dynamic duo side by side to bring them the very best in internet and mobile bundles.”

 Altice USA said it renewed its distribution agreement with NFL Media.

NFL Network will continue to be available to Altice’s Optimum Select and Optimum Premier subscribers. NFL RedZone will be available in Optimum’s Sports Package and Sports Plus Package offers.

“Optimum is thrilled to have reached an agreement to continue bringing NFL Network and NFL RedZone to Optimum TV lineups through the signing of a new multi-year agreement," Optimum chief growth officer Leroy Williams said. “Optimum customers love sports and the NFL, and we’re excited to bring them more sports programming that they know and love throughout the entirety of the NFL season.”

Financial terms of the agreement were not disclosed. 

With the cost of sports programming rising, many sports networks have seen their total subscriber numbers drop as distributors try to hold down costs to slow cord-cutting.

NFL Network is in 51.1 million homes, according to Sports Business Journal, down 5 million since last season and 30% below its peak of 72.5 million homes in 2013.

“We are excited to extend our partnership with Optimum," said Hans Schroeder, executive VP of media distribution for the NFL. “Fans with Optimum TV will continue have the ability to watch NFL Network’s award-winning coverage of America’s most popular sport as well as access to our wildly popular NFL RedZone.“

Altice USA saw profitability and revenue drop Wednesday after it reported accelerated losses among residential broadband subscribers in the first quarter.

Residential broadband users declined by 19,000 in the first quarter vs. 12,000 in the same period last year. 

But the Long Island cable company hopes a recently introduced mobile/home internet bundle, along with the deployment of 8 Gbps fiber services in its Eastern footprint and an improved customer experience focus will rekindle customer growth. 

Total revenue for the No. 4 U.S. cable operator was down 5.3% year over year in Q1 to $2.29 billion, while net income declined to $25.9 million vs. $196.6. 

Adjusted EBITDA declined 12.4% to $868.4 million. 

You can read Altice USA's Q1 earnings release here. 

Still, Altice USA stock rose nearly 7% in after-hours trading Wednesday, with Wall Street seeming to buy the No. 4 U.S. cable company's narrative about returning to sustainable growth. 

Within the overall broadband umbrella, fiber deployment had its best quarter yet, adding 38,000 customers. In the second half of this year, Altice plans to deploy symmetrical 8 Gbps services across its Eastern fiber footprint

There was also (slightly) improved performance for bundled linear video, which saw only  60,000 Altice cord-cutters in the first quarter vs. 73,600 in the same January-March period last year. 

Meanwhile, Altice's fledgling mobile unit added 8,000 lines in Q1. The company just launched its Optimum Complete Internet + Mobile bundling strategy, hoping low-priced 5G wireless service will lure customers to its core connectivity offering, much as these bundles have already done for Comcast and Charter. 

Altice is also touting a 24-point Net Promotor Score improvement following a recent customer experience push. 

“Altice USA’s first-quarter results reflect a continuation of the strategy we introduced in February centered on growing our broadband and mobile businesses to set a path to return to sustainable customer, revenue, and cash flow growth,” Altice USA CEO Dennis Mathew said in a statement. 

“The company made significant progress in driving key initiatives to increase the reliability and performance of our networks and enhance our products and customer experience, which contributed to an exceptional quarter in terms of broadband network construction as well as the best ever fiber net additions,” Mathew added. “As we move through 2023, we will continue to build on our go-to-market strategies to provide customers with seamless connections, flexibility and simplicity as evidenced by this week’s introduction of Optimum Complete, which combines our powerful internet and mobile products into one bundle to deliver the full portfolio of Optimum connectivity solutions at a great value.”

On Wednesday, former Comcast executive Marc Sirota takes over as chief financial officer at Altice USA, where he will report to 18-year Comcast veteran Dennis Mathew, who took the CEO reins from Dexter Goei back in October. 

Meanwhile, 21-year Comcast veteran David Williams is set to assume the Altice USA chief marketing officer role from longtime company marketing pro Matthew Grover. 

And Shuvankar Roy, who joined Altice just 13 months ago after an eight-year stint at Comcast, has been promoted to chief customer experience officer.

Some equity analysts are wondering what is up with all the Comcast exec talent taking over key roles at struggling Altice USA. 

And on Monday, New Street Research’s Blair Levin published an investor note, headlined, “With Their Alumni in Charge, Could Comcast Buy Altice?”

He postulated that on a regulatory level, it is possible for Comcast to make a bargain purchase of a cable company with a new New York-region fiber network, ostensibly at a relatively cheap price. 

After all, he said, it's not like Comcast would be trying to swallow up a cable operator as big as Time Warner Cable. That was the $45 billion merger deal famously rejected by federal regulators back in 2015. 

A Comcast-Altice tie-up, Levin wrote, would “not diminish competition in any relevant product and geographic market, which is the primary test for a merger review.”

Altice USA investors, who have watched the cable operator’s market capitalization — once at well above $10 billion — precipitously decline to around $1.8 billion, as its broadband customer growth has ground to a halt, like the idea of Altice merging with a far more diversified TMT conglomerate. 

Altice USA stock shot up over 6% Tuesday on Levin's speculation. 

But other analysts wonder exactly how the deal might benefit Comcast. And they question whether federal regulators would really allow the No. 1 cable company, which already controls 37% of U.S. wireline broadband, to significantly expand that market share. ■

Altice USA reported a loss in the fourth quarter as it shed video and broadband subscribers.

Continuing the cord-cutting trend across the industry, Altice said it lost 53,000 residential Optimum video customers in the quarter. For the year, the company’s residential video subscriber total was down 293,000.

The company also lost 7,700 broadband subscribers, finishing the year with 4.3 million, and said it was slowing its plans to upgrade broadband customers to fiber.

New CEO Dennis Mathew announced a series of management changes, including Marc Sirota becoming chief financial officer, replacing Mike Grau, who is retiring.

David Williams was named executive VP and chief revenue officer, succeeding Matthew Grover, who is retiring.

Sirota and Williams both joined Altice from Comcast.

The company also named Leroy Williams as executive VP, chief growth officer. He joined the company from Samsung Electronics America, where he was chief product officer.

Altice’s $193.1 million fourth-quarter loss — or 43 cents a share — compares to net income of $251.7 million, or 56 cents a share, a year ago.

Overall revenue fell 6% to $2.37 billion. Residential revenue dropped 5%, business services revenue dropped 9.3% and news and advertising declined 10.8%.

Video revenue was $781.9 million in the quarter, down from $850.3 million a year ago.

Broadband revenue dropped to $960.6 million from $972.9 million a year ago.

The company said it increased the number of fiber-to-the-home broadband customers in the quarter. Net adds were 36,000 in the quarter as total fiber broadband customers reached 172,000 at the end of the year.

But the company told analysts that it will be pulling back on aggressive fiber upgrade plans because of capital constraints, Evercore ISI analyst James Ratcliffe said. 

While the company’s revenue and EBITDA were below expectations, broadband and video subscribers losses were lighter than forecast, Ratcliffe said. ■

Altice USA reported lower profits as it lost subscribers and continued to spend on its fiber rollout.

Net income fell to $85 million or 19 cents a share, from $266.9 million or 58 cents a share, a year ago.

Revenue fell 7% to $2.39 billion.

Altice finished the quarter with 4.51 million residential relationships, down from 4.56 million in the second quarter and 4.65 million a year ago. Residential broadband customers were down 43,000 in the quarter and the company lost 82,000 video customers.

Residential revenue fell 4.4%.

Business services revenue was down 16.8% (or up 0.1% excluding air strand). News and advertising revenue was down 16.1%.

The company reiterated that it would be spending between $1.7 billion and $1.8 billion in capital expenses during the 2022 fiscal year.

“In the third quarter, we made significant progress in delivering against our Optimum Fiber broadband strategy. We saw a further acceleration in our fiber network deployment, achieving our highest ever level of incremental fiber passings and now reaching 1.9 million total fiber passings,” executive chairman Dexter Goei said. “While we are operating in a very competitive environment and are starting to see some macroeconomic pressures across our business, we are confident that we have the right strategy to return to sustainable growth. We are very pleased to welcome Dennis Mathew as our new CEO and have the utmost confidence in him to build on our current momentum and deliver on our growth plan.” ■

Just before Friday’s midnight deadline Altice USA and Fox said they reached a deal, averting a blackout that would have affected Optimum TV viewers mostly in the New York area.

“Optimum and Fox are pleased to announce that a mutually agreed upon deal has been reached that will allow continued carriage of Fox programming for Optimum TV customers,” the companies said in a statement.

Financial terms and other details were not immediately disclosed.

Also: Nexstar Stations Go Dark In Fee Dispute With Verizon Fios

The agreement will enable Altice's Optimum cable subscribers to watch Fox's fall sports programming including college football on Saturday, the NFL on Sunday and Major League Baseball playoff games.

Altice had complained that Fox was demanding “unprecedented and excessive fee increases” and said was seeking a fair deal.

Fox also said it wanted a “fair” deal at “marketplace terms.”

The expiring contract covered local Fox stations including WNYW-WWOR New York, as well as cable channels FS1, FS2, Fox News Channel, Fox Business News and Big Ten Network. ■

Fueled by an accelerated fiber rollout across its footprint, Altice USA, which has endured four consecutive quarters of broadband subscriber losses, should turn the corner in Q4 and beyond, outgoing CEO Dexter Goei told an industry audience Tuesday.

But that means that Altice USA investors will likely see continued declines in Q3. At the Goldman Sachs Communacopia + Technology conference in San Francisco, Goei said while the company has made strides in deploying its fiber network -- it expects to finish 2022 with up to 2.3 million homes passed with the technology -- it is still seeing customer declines in its former Cablevision and Suddenlink footprints. 

In Altice’s former Cablevision systems in metropolitan New York City, gross additions are lower, there is less move activity and churn levels are low, but the company also is competing against a telco -- Verizon Communications -- that has been extremely aggressive on price. In its Suddenlink markets mainly in the Midwest, gross addition activity is high but churn is high, especially in markets where it is being overbuilt.

“We’re still losing subs in both markets but for different reasons,” Goei said. “We feel good about the fourth quarter turning around and looking better next year.”

Altice USA lost about 3,000 subscribers in 2021 -- the only major cable operator to do so -- and shed more than 50,000 broadband customers in the first half of this year.  

Altice began accelerating its fiber rollout last year, with a goal of passing 6.5 million homes by 2025. At the Goldman conference, Goei said the company expects to end 2022 with 2.2 million to 2.3 million homes passed with fiber (an increase of about 1 million homes), and should add another 1.6 million to 1.8 million households by the end of 2023. 

While other cable operators have seen an increase in competition from fixed wireless access providers from telcos, Goei said most of Altice USA’s telco competition is replacing slower DSL lines with fiber, hence the acceleration of its own fiber buildout plans. But he shared his peers’ disdain for fixed wireless access (FWA), agreeing with some pundit predictions that the technology will reach a performance and penetration plateau in the next two or three years.

Goei announced his intention to step down as CEO earlier this month, and will become executive chairman of Altice USA on October 3. In his place the company named Comcast executive Dennis Mathew as CEO, also effective October 3. Mathew has 17 years of experience with Comcast, most recently as senior VP of its Freedom Region (Southeast Pennsylvania, New Jersey and Northern Delaware). He earlier served as senior VP for its Western New England Region (Connecticut, Vermont, Western Massachusetts and areas of New York and New Hampshire) and has extensive experience in running cable businesses. 

Goei said at the Goldman conference that his main motivation for stepping down was a desire to return to Europe, where he spent his childhood and most of his professional career, with his family. He added that he notified the Altice USA board of his decision about a year ago, starting the search process for a replacement about six months ago. He believes he’s leaving Altice USA in capable hands. 

“I interviewed many, many people during the process; Dennis fits the bill across the board,” Goei said, adding that Mathew has a proven track record in operations, running one of Comcast’s most high-profile regions (the Freedom Region) and will fit in well with the Altice team. “He’s just a great guy, a team player, will focus on the prize and is someone who would do very well with the executive team at Altice USA.” ■

After four straight quarters of broadband subscriber losses, a 38% decline in its stock price and the possible sale of its former Suddenlink Communications systems, Altice USA said it has named a new CEO -- Comcast executive Dennis Mathew -- while its longtime chief executive Dexter Goei becomes executive chairman.

The move will become effective as of October 3. Mathew is a 17-year veteran of the telecom industry, and has served in several operational roles at Comcast over the years. According to Altice USA, Mathew was most recently senior VP of its Freedom Region (Southeast Pennsylvania, New Jersey, Northern Delaware) responsible for strategic, financial, and operational performance at those systems. He earlier served as SVP for its Western New England Region (Connecticut, Vermont, Western Massachusetts, and areas of New York and New Hampshire) and has extensive experience in running and transforming cable businesses.

“I am honored to accept the role of CEO at this important juncture for Altice USA,” Mathew said in a press release.  “As Altice USA advances its position as a converged fixed and wireless player, I see immense potential to further connect with and serve customers in new ways while elevating the company as the connectivity provider of choice.  I look forward to leading such an innovative company that has the right vision and long-term strategy centered on investments in fiber infrastructure and a superior customer experience.”

Mathew will be based in Altice USA’s Long Island City, New York headquarters.

“I am pleased to welcome someone of Dennis’ caliber and mindset to Altice USA,” Altice USA founder and chairman Patrick Drahi said in a press release.  “He has an impressive track record at Comcast, driving transformation and success in highly competitive markets and redefining the role of telecommunications services for customers through a superior service experience, all of which will serve us well.  With our fiber network deployment well underway, I am confident that Dennis is the right leader to build on the momentum we have made as we bring the most advanced fiber broadband services to our customers across the country.  Dennis’ leadership approach, along with his commitment to our people, our customers, and our communities, will have a tremendous impact on Altice USA today and into the future.”

Goei, who intends to return to Europe with his family and helped in the selection of a new CEO, was Altice USA’s first CEO, taking over the company that was formed when European telecom giant Altice N.V., burst on the U.S. cable scene after its purchases of Suddenlink  Communications and Cablevision Systems. Goei, a longtime Altice N.V., executive, was tasked with implementing its parent’s strict cost cutting strategy, steering the operations to an initial public offering in June 2017. 

For a while, the strategy worked -- in 2019 Altice USA was one of the top performers in the cable business. But a footprint that was largely saturated -- its New York systems had some of the highest broadband penetration in the industry -- stiff competition from Verizon Fios (which operated in about two-thirds of its footprint) and the pandemic took its toll on subscriber growth. Altice USA lost 13,000 broadband customers in 2021 -- the only major cable operator to do so -- and has lost more than 50,000 high-speed data customers in the first half of 2022.  

In August, Goei acknowledged that the company was seeking a buyer for its Suddenlink systems, with some reports speculating that it expected $20 billion from a sale.  While no deal appears imminent, most analysts believe that Suddenlink will attract considerably less. .   

Drahi praised Goei for his stewardship of the assets, adding that the executive “has effectuated a business and cultural transformation at Altice USA over the past seven years, building the company into what it is today with passionate employees who are committed to our customers and to each other.  Given his intention to return to Europe with his family, Dexter has been involved in our search for a new CEO and I am grateful for his partnership to ensure Altice USA has the best leader to advance the company into its next phase of growth.  I have the highest respect for Dexter as a business partner and confidant and am pleased that he has agreed to serve as Executive Chairman of the Board of Directors while also supporting Dennis in his transition to CEO and working on key strategic initiatives.”

As executive chairman, Goei will support Mathew in the transition and work on key strategic initiatives. 

“Leading Altice USA has been the most rewarding experience in my career,” Goei said in a press release. “From our fiber network deployment and launch of multi-gig fiber broadband offerings to our diversity and inclusion programs and local community engagement efforts, I could not be prouder of what we have accomplished together thanks to the leadership team and the thousands of dedicated employees across the country who enthusiastically serve our customers and communities every day.  In the months ahead, my focus will be on ensuring a smooth leadership transition and working closely with Dennis on our key strategic initiatives.  I welcome Dennis to the Altice USA family and have the utmost confidence in him as we continue to accelerate and deliver on our fiber strategy and embark on the next chapter of our story.”■

Lightpath said Wednesday that it will expand its fiber network in western Connecticut with a 70-mile build that will connect two locations in the state -- Trumbull and Norwalk -- with Katonah, New York.

Lightpath provides fiber-based high-speed connections and services to businesses. Connecticut is home to 14 Fortune 500 companies participating in industries like advanced manufacturing, aerospace, bioscience, insurtech and medtech, according to Lightpath.

“Lightpath’s all-fiber fiber network offers organizations across all industries access to robust connectivity with the highest levels of flexibility, reliability and security,” Lightpath SVP of sales Doug Turtz said in a press release. “Lightpath continues to invest in Connecticut, as well as the greater New York City Metropolitan Area, as we have for over 30 years now. We are committed to enhancing our network and services for our existing customers, as well as continuing to bring Lightpath to new customers in more places.”

Lightpath is majority owned by Altice USA, which sold a 49.99% interest in the company to Morgan Stanley Infrastructure Partners in 2020 in a deal valued at $3.2 billion. According to Lightpath, the Connecticut expansion is part of an aggressive growth strategy and that over the past year it has:

●    Reached a milestone of 20,000+ route miles and 13,500+ service locations

●    Completed a 300-mile expansion from New York metro to Ashburn, VA

●    Finished a 54-mile network extension throughout Princeton, New Jersey

●    Built a 100-mile of state-of-the-art network across Queens, New York

The company also recently opened new offices in Midtown Manhattan and Boston. ■  

Verizon Communications shares dipped more than 3% Thursday after MoffettNathanson downgraded the stock to "underperform" from "market perform," and lowered his 12-month price target on the stock to $41 from $55 each, adding that the company is losing ground to lower pricing from AT&T, better 5G networks from T-Mobile, and the increasing threat of cable wireless. 

Verizon stock was priced as low as $43.91 in early trading August 18, down 3.2% or $1.13 per share, after MoffettNathanson senior analyst Craig Moffett wrote that two years after AT&T started its aggressive pricing strategy, Verizon has "seesawed between periods of promotionality and financial restraint, optimizing neither. They have recently pulled back sharply on promotions, a reversal of their approach in Q2, and have introduced a suite of lower priced plans instead. There are no easy answers."

Verizon shares closed at $44.19 each on August 18, down 2.5% or $1.15 per share. 

At the same time, Verizon appears to be losing the battle with T-Mobile, which still has the lowest pricing in the industry despite spending heavily to build out its 5G network. T-Mobile now has the largest 5G network in the country, a crown that used to be worn by Verizon.

Adding to the pressure is the emergence of cable wireless. Moffett noted that Comcast, Charter Communications and Altice USA added a combined 694,000 wireless customers in Q2, about 100,000 customers more than in the same period last year. Cable now accounts for more than 9 million wireless customers, still only about 3% of the market, but it is growing. And recently Cox Communications said it was beta testing its own wireless MVNO, which Moffett wrote "will only add to the pressure on the incumbents."

Also: Analyst Says it's Time to Take Cable Wireless Seriously 

Moffett's outlook isn't much better for AT&T. While the analyst maintained his "market perform" rating on the stock, he lowered his 12-month price target to $17 per share from $19 because of lower growth expectations. But Moffett raised his price target on T-Mobile to $174 each from $165, citing its strong growth prospects. ■

About two weeks after a Bloomberg report that said Altice USA had hired investment banker Goldman Sachs to seek a buyer for its Suddenlink systems, company CEO Dexter Goei confirmed that a sales process is “going on,” but declined to offer more details. 

Suddenlink has about 1.8 million subscribers in 17 states in the Midwest, south and western parts of the country. Altice is also in the process of rebranding the Suddenlink systems under its Optimum brand.

Goei’s confirmation came during a conference call with analysts to discuss Q2 results.

News of the sales process confirmation drove Altice USA stock -- which had been down about 2% in after-hours trading earlier -- up nearly 9% to $10.50 each in after-hours trading.  

“We can confirm there is a process going on,” Goei said on the call. “I don’t think we want to comment any further than that, much like we did when there was a lot of chatter around Lightpath. We’ll update you and the rest of the market when we deem it appropriate to update. But at this time there is nothing further to talk about.”

Altice sold a 49% interest in its Lightpath telecom unit in December 2020 to Morgan Stanley Infrastructure Partners in a deal with an implied value of $3.2 billion. 

The value of Suddenlink would depend on the buyer. While Bloomberg had said the systems could sell for as much as $20 billion, implying a deal multiple of 14 times cash flow, many believe the systems would sell for less. 

Goie said the company has “received a lot of reverse inquiries for all or parts of the Suddenlink assets” but declined to speculate on potential buyers or prices. 

“I don't think we want to get into a debate,” as far as the financials or operations of the systems, Goei said. “The numbers have been out there historically on the assets, so you can probably figure out what the numbers look like.” ■

Altice USA said it shed about 40,000 broadband customers in Q2, its fourth consecutive quarter of losses and double the 20,000 decline that many analysts expected.

Altice USA first reported a quarterly decline in broadband subscribers in Q3 2021 (-13,100), and finished the year with a 13,000 high-speed data customer deficit, after shedding another 1,900 customers in Q4. While the company has made some moves to right the ship -- it has accelerated its fiber broadband buildout plans, built new retail outlets and is rebranding all of its systems under the Optimum name, the losses continued. Altice USA lost about 13,000 broadband customers in Q1 and the current decline is its biggest quarterly broadband loss ever. 

Overall revenue was down 2.1% to $2.46 billion and cash flow fell 8.8% to $1 billion. 

Altice USA shares were down about 2% each in after-hours trading Wednesday to $9.49 per share.

Also: Cable's Broadband Slowdown: Saturation or Share Loss?  

Other large cable operators missed broadband growth targets in Q2 -- Comcast reported flat growth and Charter Communications lost 21,000 subscribers, its first loss in the segment ever. The results come several days after reports said that Altice USA had hired Goldman Sachs to seek possible buyers for its Suddenlink systems. 

Leading up to earnings announcements, most analysts expected Altice USA to lose broadband customers, with estimates ranging from a loss of 9,000 to 22,000 customers.   

Despite the decline, Altice USA CEO Dexter Goei said the company is turning a corner, adding in a press release that the company is beginning “to see the benefits of our investments against our growth initiatives.”

Earlier this year Altice said its fiber network passed 1.6 million homes, exceeding expectations, and has more than 100,000 fiber customers. In addition, the company launched multi-Gig service in June, and its Optimum Mobile service, although it still lags behind its larger peers, has more than 200,000 customers. 

“As we remain extremely focused on executing against these key growth initiatives, we expect an improvement in our overall customer growth going forward,” Goei said in the press release. ■

Altice USA said it has begun the rebranding of all of its Suddenlink systems under the Optimum name, launching a nationwide brand campaign, “Get Closer, Go Farther.”

Altice USA took the first steps toward retiring the Suddenlink brand in July 2021,  when it said all of its wireless products would be rebranded under the Optimum Mobile name. In April of this year, it launched its “Let’s Reconnect” campaign with a pledge to rebrand the Suddenlink markets later in the year. Suddenlink has about 1.8 million customers in 17 states mainly in the Midwest, southern and western parts of the country. Altice purchased the systems in 2015 for $9.1 billion. 

The rebranding news also comes days after reports claimed that Altice USA had hired Goldman Sachs to seek a buyer for the properties.  

“Get closer and go farther. That’s our Optimum brand promise and what we aim to deliver to our customers through our connectivity services and experiences we offer,” Optimum EVP consumer and business services Matt Grover said in a press release. “We are thrilled to launch this new campaign and officially bring our Suddenlink products and services under the Optimum brand, uniting our telecommunications division under one name, one voice, and one promise to customers to deliver the very best internet, TV, and mobile service to them every day.”

Starting August 1 and throughout the months ahead, the company will transition Suddenlink properties and assets to Optimum, including vehicles, stores, websites and uniforms.

In the press release, Altice USA said the aim of the new brand and tagline is to demonstrate the company’s promise to bring customers closer together with its products and services to enable them to go farther into the future. This effort includes new campaign TV spots, the acceleration of the build out of its fiber internet network; the launch of Optimum 2 Gig and 5 Gig Fiber Internet; removing data caps on all Suddenlink internet plans as part of the transition to Optimum; opening nearly 20 new state-of-the-art Optimum retail stores across the country in recent months; and rebranding its Optimum Mobile service, which was recently ranked #1 in customer satisfaction by the American Customer Satisfaction Index. ▪️

Analysts have been waiting for the other broadband shoe to drop for months after most cable companies missed broadband subscriber growth targets in Q1, and they got it Thursday after Comcast, the largest cable operator in the land, reported zero broadband additions for Q2, a bit earlier than expected. Now, as cable pundits consider dropping their growth estimates for cable’s cash cow yet again, the big question for at least one analyst is whether the drop-off is due to saturation or share loss.

Just what caused the largest cable operator in the country to have precisely 0 broadband customer growth will matter for the rest of the industry because cable can rebound from saturation, but share loss is another thing entirely.

Also: Broadband Slowdown Forces Some Analysts To Go Negative on Cable Sector  

In a research note Thursday, MoffettNathanson senior analyst Craig Moffett wrote that at the moment it appears that the overall broadband slowdown is a combination of encroaching saturation and sluggish new household formation instead of share loss. And, in his note, he stressed that the former is much better than the latter. 

“If the problem is saturation, then we should be slowing towards zero (or, more precisely, towards the rate of new household formation),” Moffett wrote. “If the problem is share loss, well, then let your imagination run wild. There’s no floor. And if the problem is saturation, then pricing power isn’t jeopardized. If the problem is share loss, broadband ARPU is at risk.”

Also: Most Eyes Should Be on Comcast Q2 Broadband Performance 

Comcast managed to grow broadband ARPU in Q2 by about 3.6%, not great but respectable, given that it lost 10,000 residential and gained 10,000 business high-speed data customers in the period. ▪️

The Waiting Is the Hardest Part

Most analysts have been waiting for this day ever since Comcast reported 262,000 broadband additions in Q1 -- a number that beat most estimates but was fueled by a large portion of customers on free plans that converted to paying plans. Absent those customers, Comcast would have added about 175,000 broadband customers in that period, well behind some estimates of 180,000 to 225,000 additions.  

Prior to Thursday, most analysts were expecting broadband additions to fall off considerably, a factor of seasonality -- Q2 is when students and snow birds cancel service for the summer -- and other macroeconomic trends. But many analysts expected losses to come from other cable operators -- consensus was for Comcast to add about 84,000 high-speed internet customers in the quarter -- not the largest one. Now, some are changing their minds.

Also: Has Cable Broadband Hit the Wall? 

“We expected Charter to post negative growth in consumer broadband in 2Q22 but had expected a slightly better result at Comcast largely because Comcast has more levers to pull with respect to its product set (Flex, Peacock, TV etc.) but despite all this, Comcast performance may not really be that different from Charter after all,” wrote Barclays Group media analyst Kannan Venkateshwar in a note to clients Thursday, adding that Comcast “seems to be seeing negative growth thus far in 3Q as well, although it expects some seasonal improvement in August and September.”

That will likely cause analysts across the board to shift their estimates for overall cable broadband subscriber growth downward. Charter is scheduled to report Q2 earnings tomorrow (July 29), so depending on those numbers, predictions may have to be rejiggered again. 

Also: Cable Broadband Slowdown to Continue in Q1 and Beyond, Analysts Say 

Movin’ On Up [Not]

Comcast tried to downplay the lack of broadband growth on a call with analysts, stressing that it has added about 800,000 high-speed internet customers in the last 12 months and 3 million in the last two years. But that included the pandemic, when most Americans needed high-speed connections to work, school and play from home and many were receiving government subsidies for service. As those requirements were lifted, some decided they didn’t need cable broadband, or perhaps found a lower cost alternative. 

Comcast’s flat growth comes a day after T-Mobile said it added 565,000 fixed wireless access customers in Q2, soundly beating even the most optimistic analyst estimates. Fixed Wireless Access (FWA) has been feared to be a major threat to cable wireline broadband,  but Comcast execs said FWA wasn’t a factor in Q2 results.

Comcast chairman and CEO Brian Roberts said during a conference call with analysts that although fixed wireless is a new competitor targeted mainly at price-conscious consumers, it has had “no discernible impact” on churn, but its early growth appeared to be another contributor to lower overall connect activity. Instead, Roberts blamed the flat growth on three factors -- a slowdown in housing moves (Q2 was 12% below 2019), the reversal of some pandemic trends -- the surge in lower income households getting broadband has waned -- and competition. 

Roberts vowed to turn around the broadband product, adding that Comcast is confident it can return to residential growth and is expanding its footprint, accelerating edge-outs, “playing offense when it comes to government subsidies,” aggressively competing for market share and increasing the value of the broadband product by bundling it with mobile service and its Flex offering. 

Also: Analyst Says Telcos Better Positioned to Chip Away at Cable’s Broadband Lead  

“We are in a unique environment with some headwinds,” Roberts said of the cable business. “But move activity should return to some level of normalcy, mobile substitution will eventually  stabilize and we believe fixed wireless has inherent performance and capacity limitations that sharply limit the number of people on a network using a given amount of spectrum, which should provide a natural cap on their overall industry penetration.”   

Other Than That… 

Despite the less than expected broadband performance, the rest of Comcast’s businesses appear to be doing well. Theme Parks cash flow nearly tripled in the period, its highest quarterly cash flow growth in that segment ever, movie studio revenue was up 33% driven by strong theatrical releases, wireless subscriber additions at 317,000 was the best Q2 ever for that segment. Even Sky, Comcast’s European satellite unit, saw cash flow rise 54% in the period. But for investors, that didn’t seem to make a difference.

“With full acknowledgement that the broadband debate isn’t just the most important debate right now, but in fact is the only debate right now, it is worth noting that everything else in Comcast’s report was very strong,” Moffett wrote, adding that the overall takeaway is “almost certainly going to be negative.

“Broadband subscriber growth is all that matters,” he continued. “And even if our ‘saturation rather than share loss’ thesis is correct, there is a risk that by the time the evidence of causality becomes a little clearer, competitive share losses to fiber actually will have begun to accelerate… even if the growth rate of FWA has by then abated.”

Moffett noted that although housing moves is a common excuse for the slowdown, Comcast was less dismissive of fixed wireless than it has been in the past, and seems to be committed to growing the footprint. 

“None of this is likely to shift sentiment, which, in the face of slower broadband growth, remains rather dour indeed,” Moffett wrote. ■ 

Comcast will kick off the Q2 earnings season Thursday morning and while many eyes will be on whether the nation’s largest cable company will address rumors it is contemplating buying a smart TV manufacturer, more important to the industry will be how it measures up to broadband subscriber growth targets.

Reports surfaced Wednesday that Comcast has had talks with smart TV companies Vizio and TP Vision about possible acquisitions. While the seriousness of those talks is debatable, Protocol said discussions with Vizio were held in 2021 and in early 2022, but that it was "unclear how far the discussions with each company progressed, or whether they are still ongoing." Of more imminent importance will be whether the tone for the rest of the year concerning broadband growth will be better or worse.

Comcast’s results will come on the heels of somewhat mixed Q2 reports from top telco competitors AT&T, Verizon and T-Mobile. AT&T’s fiber broadband adds topped 316,000 in the period, one of its strongest showings ever but not enough to offset 341,000 IP broadband losses in the quarter. Verizon added 256,000 fixed wireless customers in Q2, but 36,000 additional Fios broadband customers missed analysts’ estimates.

T-Mobile, which earlier said it would shell out about $500 million -- $350 million directly to customers -- for a 2021 data breach, added 560,000 fixed wireless broadband customers in Q2, topping even the most optimistic estimates.

After several quarters of record subscriber growth during the pandemic, Comcast and the rest of the cable industry saw what was once the runaway high speed data train come to a near halt. After nearly 2 million additions in 2020, Comcast’s performance slowed in 2021 to 1.3 million additions. So far this year it managed to outpace consensus estimates for Q1, reporting 262,000 broadband additions for that period -- consensus was for around 230,000 additions. But most analysts expect growth to slow to a crawl in Q2 -- most have Comcast adding less than 100,000 high-speed data customers in the period, which would be its lowest quarterly broadband subscriber growth since Q2 2009.

Also: Cable’s Broadband Slowdown Hasn’t Hit Bottom Yet, Analyst Says

MoffettNathanson senior analyst Craig Moffett estimates that Comcast will add about 91,000 high-speed data subscribers in Q2, compared to 354,000 additions in the same period last year. Wells Fargo Securities media analyst Steven Cahall expects even more sluggish performance -- he predicted Comcast would add just 50,000 broadband customers in the period -- while Barclay’s media analyst Kannan Venkateshwar was slightly more optimistic, estimating the cable operator would add 74,000 broadband customers in the period.

Comcast isn’t alone. The analysts also have lowered expectations for the rest of the sector. For Charter Communications, which is due to report Q2 earnings on July 29, Moffett is most optimistic, estimating Q2 broadband additions will be 90,000, while Cahall predicts they will fall to 15,000 and Venkateshwar believes they will be flat for the period.

"We continue to expect Cable net adds to slow through 2022 (and beyond), driven primarily by an acceleration in fiber and fixed wireless growth," Cahall wrote in a July 25 report. "We've seen the composition of quarterly net add growth drastically shift over the past year, with fiber and fixed wireless expected to account for much of the growth in 2Q, offset by declining legacy Telco DSL subs and modest Cable additions."

At Altice USA, which according to some reports hired Goldman Sachs to shop its Suddenlink systems to the highest bidder, is scheduled to release Q2 results on August 3, Moffett expects the past trend of broadband losses to continue for the operator, estimating it will shed 9,000 broadband subscribers in the period. Cahall predicts Altice USA will lose 22,000 broadband customers, while Venkateshwar is close behind with an estimate of 20,000 in losses. ■

Altice USA stock continued to rise on Friday, albeit at a much slower pace than the day before, as investors started to realize that if a sale of its Suddenlink unit were to happen, it would likely be at a more reasonable price than the $20 billion that had been previously speculated.

Altice USA shares spiked as high as $13.17 each on Thursday, up 43%, after Bloomberg News said the company had engaged investment banker Goldman Sachs to look for potential buyers of its Suddenlink systems in the Midwest, South and West. According to the Bloomberg report, buyers could pay as much as $20 billion for the unit. The stock closed at $11.24 each, up 22.5% on July 21 and rose another 2% in Friday afternoon trading.

A $20 billion price tag would imply the deal could be done at a 14 times multiple of cash flow -- the prevailing metric for cable deals -- or about twice that of earlier deals. Suddenlink has about 1.8 million subscribers and passes about 3.9 million homes, which would make it the fifth largest cable operator in the country on a standalone basis. 

In a research note, MoffettNathanson senior analyst Craig Moffett wrote that while a Suddenlink sale would seem to contradict Altice USA’s previous direction -- it has pumped billions of dollars into building out its fiber network and has said Suddenlink was its clearest growth engine -- a deal could be done. Moffett noted that there has been substantial interest in cable assets from private equity funds recently -- Stonepeak Infrastructure Partners, TPG  and Macquarie Capital all have done recent deals -- as well as from smaller strategic players. But paying twice the prevailing rate for cable operations that will still need to be upgraded may be a tough row for Altice USA to hoe. 

Moffett also questioned Bloomberg's $1.3 billion cash flow estimate for Suddenlink, adding that was the company's trailing 12-month EBITDA in 2018. It likely has risen since then -- and if it hasn't Suddenlink has more serious problems -- and Moffett predicted that today it is more likely in the $1.6 billion range. That would value a $20 billion deal at about 12.5 times cash flow, still high, but more palatable to a potential suitor.    

As far as potential buyers Moffett wrote that the two largest operators -- Comcast and Charter Communications -- have held back on system purchases because of regulatory concerns. That leaves Cable One as the most likely strategic player interested in Suddenlink, because it is around the same size. 

But he added that Cable One would likely have to issue equity in a deal, and Altice USA probably has little interest in owning another cable stock. While Cable One has issued shares to the public and used the proceeds for deals in the past, the size of a Suddenlink deal would make that infeasible. 

“To be sure, none of this means that Cable One couldn’t be a potential buyer. It is simply to say that it wouldn’t be easy,” Moffett wrote.

That leaves private equity players. And though there haven’t been any significant PE cable deals this year, meaning the desire to pay high prices for assets may have waned, Moffett noted that there should be both significant amounts of capital available and a high degree of interest in Suddenlink. 

“In short, then, while we don’t expect the two largest cable operators to be active buyers, we nevertheless believe that Altice could mount a robust auction process, and that they could likely be able to attract a fair price,” Moffett wrote. “It’s just not likely to be a price comparable to what they might have gotten nine to twelve months ago.” ■ 

MoffettNathanson joined the recent chorus of a steeper-than-anticipated slowdown in broadband subscriber growth for the second quarter, expecting large operators like Comcast and Charter Communications to report less than half the customer gains they did in Q1, while wireless customer additions are anticipated to maintain their recent upward momentum.

After its purchase by SVB Financial Group, MoffettNathanson was required to reinitiate its coverage of the sector, and on Tuesday (July 12) it did just that. Of the nine cable and telecom stocks MoffettNathanson follows, four have an “outperform” rating: T-Mobile, Comcast, Charter and fixed-wireless access provider Starry. The rest — Altice USA, Cable One, AT&T, Verizon Communications and Dish Network — have a “market perform” rating.

Several analysts have already modified their broadband subscriber growth forecasts for the bigger operators, with some expecting full-year 2022 additions to be nearly one-third of those of the peak year of 2020. Driving those modifications are the added pressure of increased fiber buildouts by telcos like AT&T and Verizon, aggressive pricing, the near disappearance of digital subscriber line customers — once a top feeding ground for cable broadband — and sluggish new household formation. 

In his report, MoffettNathanson senior analyst Craig Moffett estimated that both Comcast and Charter would report broadband growth of 91,000 and 90,000 in Q2, less than half the 262,000 and 185,000 they added, respectively in Q1. 

Broadband to Rebound a Little

Moffett, like other analysts, expects the declines to soften over the next five years, but not enough to reach even the prepandemic levels of 2019. He expects Comcast, the largest cable operator in the country, to end 2022 with an additional 698,000 broadband customers, about half the 1.358 million it added in 2021. Charter, he wrote, should add about 716,000 broadband customers in 2022, compared to 1.2 million additions in 2021. 

In later years, the gap between Comcast and Charter should widen. Moffett expects Comcast to add 751,000 broadband customers in 2023; 767,000 in 2024; 784,000 in 2025; and 800,000 in 2026. For Charter, year-end additions should be 824,000 in 2023; 873,000 in 2024; 902,000 in 2025; and 925,000 in 2026.

But in his report, Moffett attributed the slowdown in broadband additions for both Comcast and Charter to the fact that the market is nearing saturation, not new or more competition. That, he wrote, is “a view that implies further slowing but no outright reversals.”

Moffett also believes that the market is not giving either Comcast or Charter enough credit for their respective wireless businesses. And he expects them to continue to grow robustly.

In the report, Moffett estimated that Comcast would add 320,000 wireless subscribers in Q2, up slightly from Q1 additions of 318,000 customers. For the full year, he predicts Comcast will add about 1.3 million customers — up from 1.15 million in 2021. Between 2023 and 2026, Moffett anticipates wireless additions to be a steady 1.25 million customers per year. 

Charter’s wireless additions should dip to 318,000 in Q2 from 373,000 in Q1, but for the full year Moffett anticipates growth to 1.4 million additions, up from 1.2 million in 2021. However, he sees wireless additions slowing to 1.2 million in 2023, 1.1 million in 2024; 960,000 in 2025 and 860,000 in 2026.

Altice USA, which reported a loss of 13,000 broadband subscribers in 2021, should lose about 9,000 in Q2 and 6,000 for the whole of 2022. From there, the prospects look a little better — Moffett estimates it will gain 23,000 broadband customers in 2023; 78,000 in 2024; 81,000 in 2024 and 83,000 in 2025. Wireless additions are expected to be about 41,000 in 2022, rising to 76,000 by 2026, according to Moffett. 

Cable One should continue with modest gains in broadband customers, adding 7,100 in Q2 —  down from 13,000 in Q1 — and 41,700 for the full year. Growth should be fairly steady from there, according to Moffett, who estimates it will add 42,100 in 2023; 41,700 in 2024; and 41,900 in 2025. Cable One does not have a wireless offering yet.

On the telco side, aggressive fiber buildouts and pricing should help boost subscriber numbers significantly. 

High Upside for T-Mobile

Moffett was most impressed with T-Mobile, his top pick in the telecom sector, for its aggressive deployment of 5G technology and its competitive pricing structure. 

“The combination of a single telecom operator having both the industry’s best network and its lowest prices is unprecedented, and we believe paves the way to significant share gains,” Moffett wrote, adding that opportunities in rural markets and business customers “underscore the attainability of these gains.”

As a result, Moffett expects T-Mobile’s postpaid net additions to be 1.3 million in Q2, even with Q1. For the full year, he expects postpaid net additions to be 5.9 million, up from 5.6 million in 2021.

Telcos AT&T and Verizon aren’t expected to fare as well, mainly due to saturation and the wireless threat from cable. Moffett expects AT&T to have about 750,000 postpaid additions in Q2, down from 965,000 in Q1. For the year, net additions should be 2.8 million (down from 4.4 million in 2021) and sliding to 1.1 million in 2023, 850,000 in 2024 and 650,000 in 2025 and 2026. 

“As subscriber growth in an already-saturated wireless industry decelerates back towards population growth, we believe AT&T will be hard-pressed to post positive unit growth,” Moffett wrote.

At Verizon, aggressive pricing should boost subscriber numbers briefly -- Moffett predicts they will add 440,000 postpaid subs in Q2, nearly double the 269,000 additions in Q1. And though that will boost growth in 2022 above the prior year (2.3 million versus 2.1 million), those additions are expected to temper in later years. Moffett predicts postpaid net additions at Verizon will slip to 2.1 million in 2023, 1.8 million in 2024, 1.5 million in 2025 and 1.4 million in 2026.  

“We believe Verizon faces a challenging path forward,” Moffett wrote.

Fixed-wireless access provider Starry should continue to do well, reaching about 63,200 customers in 2021. That number could increase ten-fold by 2026 to 649,200 according to Moffett, but it will depend on the company’s ability to raise capital. It already has proven its technology works and can reach apartment dwellers relatively easily, and Moffett wrote that he expects costs to serve single-family homes will fall enough to make serving that segment attractive. 

“We believe they can achieve sufficient penetration at sufficiently high prices to earn an attractive return on capital in each individual market they launch, and that they can, in turn, ‘stack’ markets to achieve attractive returns as a whole,” Moffett wrote. “The fly in the ointment may be a circular argument related to their stock price itself: scaling their business will require raising additional capital. If their stock price is close to or above warranted value, it would not be a problem (and it won’t be dilutive). If, on the other hand, their stock price is meaningfully below warranted value (as it currently is), then a capital raise — which should be necessary one way or the other — would be substantially dilutive.” ■

Do you want to know how bad it has been for cable stocks? So bad that even the apparent removal of one of the sector’s biggest albatrosses — the threat of net neutrality regulation — wasn’t enough to move the needle into positive territory as distributors, hampered by fears of slower broadband growth and stiffer competition, shed about 13% of their value in Q2. 

Overall, cable distribution stocks — Comcast, Charter Communications, Altice USA and Cable One — saw their collective share prices fall 12.7% during Q2. The biggest loser was Altice USA, which fell 25.9% between March 31 and June 30, as fears of another quarter of broadband subscriber losses took hold. Other stocks didn’t fare much better — Comcast was down 15.7% in the quarter, closing at $39.24 per share on June 30, followed by Charter (down 14.1%) and Cable One (down 11.9%). 

The stocks were down 48% for the first six months of the year, as a steep decline in Altice USA’s share value sunk the rest of the sector. Altice USA shares were down 42.8% for the first six months of 2022, followed by Charter (down 28.1%), Cable One (down 26.9%) and Comcast (down 21.2%).

(Source: Yahoo Finance)

A combination of fears that the slowdown in broadband subscriber growth will continue longer than originally expected, coupled with an overall market malaise (the S&P 500 entered into bear market territory in June), rising inflation and worries that the country may be headed into another economic recession all helped drive down stocks. For what it’s worth, every sector has had to weather some declines as the major indices have slipped over the past several months. The S&P is down 20% so far this year — its lowest point in more than 50 years -- while the Dow has slipped 15% and the NASDAQ Composite fell 30% in Q2. 

Also: Has Cable Broadband Hit the Wall?

Content stocks fared no better. Warner Bros. Discovery, the new entity created through the merger of Discovery Inc. and AT&T’s WarnerMedia assets, fell the hardest, down 46.1% for the quarter and closing June 30 at $13.42 each. The Walt Disney Co., home of the Disney Plus streaming service, dipped nearly 31% during the period, followed by Paramount Global (down 34.7%), AMC Networks (down 28.3%) and Fox Corp. (down 18.5%). For the full year, Warner Bros. Discovery fell 43%, followed by Disney (down 39%), Paramount Global (down 18.2%), AMC Networks (down 15.4%) and Fox (down 12.3%).

Telcos Ride High

While cable distributors were feeling the pressure of slower broadband growth, telecom stocks like AT&T and T-Mobile rode high on speculation that their aggressive fiber buildout plans would continue to take share. AT&T stock was up 17% in Q2 to $20.96 on June 30, while T-Mobile rose 4.8% during the period. Verizon, which shook up cable shares late in June with a new pricing plan for unlimited broadband, was flat for the period. 

Dish Network, which launched wireless service in Las Vegas in June, dipped 43.3% in Q2, closing at $17.93 per share on June 30. 

It seemed like even good news couldn’t shift the gloomy sentiment around cable distributors stocks. Even a June 30 U.S. Supreme Court ruling that called into question a federal agency’s ability to regulate power plants, which could have the same effect on the Federal Communications Commission’s attempts to classify cable broadband as a Title II telecom service -- so-called Net Neutrality -- only lifted shares slightly. 

The sector as a whole yawned on June 30, up 2% after the ruling. Shares rose only another 1% on July 1, after investors had a full day to absorb the significance of the ruling.   

With Q2 earnings coming up in just a few weeks — Comcast is scheduled to report on July 28, followed by Charter on July 29 — investors will be looking closely at any deviations from the norm regarding broadband growth. Charter chief financial officer Jessica Fischer said at the Credit Suisse Communications conference June 15 that customers no longer qualifying for federal broadband discount programs could impact subscriber numbers by 60,000 to 70,000 homes. While Fischer said she still expects Charter to post positive broadband growth in Q2, it will likely be lower than what some analysts were expecting.  

In a June 17 research note, Wells Fargo Securities media analyst Steven Cahall noted that just when investors feel the cable sell-off is over, “a new negative data point hits.” 

“Valuations are near parity with Telco and that doesn't seem right to many given the structural advantages in broadband markets,” Cahall wrote, adding that Charter’s Q2 broadband commentary coupled with Verizon’s aggressive pricing suggest that the “estimate revision pain isn't over, and sentiment won't recover without some certainty around competition.” ￭

Altice USA said it will launch a 5 Gigabit per second broadband service in parts of its Long Island, New York footprint in June, along with a lower-priced 2Gbps product, more than twice the speeds offered by its competition in the market. 

The 5Gbps service will be priced for new customers at $180 per month, with the 2Gbps offering costing new subscribers $120 per month. Altice USA CEO Dexter Goei said in a press release that the multi-gig offering will be available across its New York, New Jersey and Connecticut fiber footprint by the end of the year.    

Altice USA said it would speed up the build out of its fiber network throughout its footprint earlier this year, aimed at bringing faster speeds to customers. The  company lost about 13,000 broadband subscribers in Q1 -- the only major cable operator to do so -- and has made some big changes in the past few months including rebranding its service, to win them back. 

Other operators have offered multi-gig service -- Comcast currently offers a 3Gbps service (Gigabit Pro) in all its markets for $299 per month and recently tested a 400Gbps service -- but offerings generally top out at about 1Gbps. And CableLabs’  DOCSIS 4.0 standard is supposed to enable speeds of up to 10Gbps once it is deployed.  

There are critics that have said most users don’t need speeds that fast -- most can stream video and access the internet with speeds as low as 100 Megabits per second -- but as bandwidth hogging applications like virtual reality, 4K TVs and multiple connected devices proliferate, they may  benefit from faster service. According to researcher OpenVault, average data usage for US consumers has doubled since 2018.  

In a press release, Altice USA said the multi-gig services are symmetrical, meaning customers will receive the same upload and download speeds. The higher speeds also will allow customers to access higher resolution video streaming up to 8K; lower latency which helps in data intensive applications like virtual reality and gaming; greater reliability and Smart WiFi6 for greater whole home coverage. 

“As we continue to expand our new 100% Optimum Fiber Internet network across our footprint, we are pleased to bring the fastest residential fiber internet service to the tri-state area,” Goei said in a press release. “Customers on our Optimum Fiber network are already enjoying fast, symmetrical speeds and a reliable connectivity experience, and we look forward to bringing even faster service with more bandwidth than ever before with our 5 Gig and 2 Gig Optimum Fiber Internet speeds.”   

Just months after it pressed the accelerator on its planned fiber network buildout, Altice USA said it lost about 13,000 residential broadband customers in Q1, driving revenue down 2.3% to $2.42 billion in the period and cash flow down 7.7% to $991.7 million.

Altice lost about 3,000 broadband subscribers in 2021, as competition from Verizon and delays in its fiber rollout affected the business. In February, Altice USA said it would accelerate its fiber build-out plans, planning to pass about 6.5 million homes by 2025.  

Altice said it is making progress on the fiber rollout, adding that it added 146,000 new fiber-to-the-home (FTTH) passings in Q1, bringing the total number of homes passed with FTTH to 1.3 million. The company said it plans to add another incremental 1.3 million FTTH passings in 2022.

The company also is moving forward with its edge-out program, extending its network to 42,000 additional homes in Q1 and to 273,000 total passings in the past 12 months. 

While Q1 losses were higher than even the most skeptical analyst expected — most estimated growth would be flat to down by about 3,000 customers. In a conference call with analysts to discuss results, Altice USA CEO Dexter Goei said the performance was more due to lower gross additions and slower household move activity. While competition was somewhat of a factor in its Suddenlink territories in the Midwest, Goei said churn is stable in its eastern Optimum markets and its competitive stance with Verizon’s Fios product is improving on a quarter-over-quarter basis. 

Still, Goei was reluctant to say that Altice will be able to turn around its broadband deficit this year.

“We definitely believe we are going to be growing subscribers in the second half of this year,” Goei said on the call. “I can’t tell you where the map will end up and whether we will be positive [for the full year] or not. But we’re clearly pushing to the positive and we’ve got some good momentum in terms of some of the initiatives we’ve been working on for the last six months.”

For instance, Altice said that it added about 11,000 fiber-to-the-home customers in the markets it has upgraded and plans to roll out a multi-Gig product in the second quarter, which should attract heavy data users — the company said the average speed taken by customers is 363 Megabits per second, and its broadband-only customers consume an average of 630 Gigabytes of data each month. Also, Goei was pleased with its mobile additions in the quarter — about 12,000 customers — coming after the company renegotiated its MVNO agreement with T-Mobile earlier this year. Those moves, coupled with its rebranding and improved customer experience campaigns, are anticipated to have a positive effect on growth. ▪️

With Comcast expected to kick off the Q1 earnings season Thursday morning, analysts are expecting the broadband slowdown to continue throughout the year, with operators anticipated to report high-speed internet customer additions at about half the rate of last year.

Comcast is scheduled to report Q1 earnings on April 28 at 8:30 a.m., and Evercore ISI Group media analyst Vijay Jayant sees the nation’s largest cable operator reporting broadband additions of about 200,000 customers, or less than half the 423,000 they added in the same period last year. Other analysts, like Wells Fargo Securities' Steven Cahall and J.P. Morgan’s Phil Cusick, are in the same ballpark. Cusick expects Comcast to add about 180,000 broadband customers while Cahall predicts it will be a bit higher at 224,000 additions.

And they expect the sluggishness to continue throughout the first half of this year. Jayant is keeping his predictions consistent -- he expects Comcast to add another 200,000 broadband customers in Q2 -- but others see the slowdown getting even slower. Cusick predicts Comcast will add 155,000 broadband subscribers in Q2 and Cahall is in for 135,000 additions. 

All three of the analysts predicted a slower first half, followed by a stronger second half of the year. For Comcast, Jayant was most consistent, estimating it would add 200,000 broadband customers in Q3, 225,000 in Q4, ending the year with 825,000 broadband additions, about 30% less than the 1.2 million it reported in 2021. 

Cahall estimated that Comcast would end 2022 with 836,000 broadband additions -- 216,000 in Q3, 261,000 in Q4 -- while Cusick predicted Comcast would add 256,000 in Q3 and 230,000 in Q4 for a year end tally of 821,000 additions. 

Charter Communications, which is scheduled to report Q1 earnings on April 29, led all cable operators during the pandemic with 2.2 million broadband additions in 2020, falling to 1.2 million total additions in 2021 and is expected to dip even more in 2022. For the quarter, Cahall is most optimistic, predicting 186,000 residential additions, followed by Cusick (180,000) and Jayant (175,000). For the full year, Jayant estimates that Charter will add 775,000 residential broadband customers (a 35% growth decline), while Cahall predicts 741,000 additions and Cusick 710,000 additions.  

Lower move rates seem to be having the biggest overall impact on Charter (and Comcast for that matter), according to the analysts. Cusick noted that because Q1 is usually a seasonally better quarter, it is possible that Charter outperforms his estimates, but added he expected lower household completion and move rates to weigh on results. Jayant said the same for Comcast, adding that the low move churn environment creates “fewer ‘jump ball’ opportunities for gross adds.” 

Altice USA, which began an aggressive acceleration of the buildout of its broadband network last year after reporting a 3,000-subscriber decline in high-speed internet customers for the full year, is expected to be flat or slightly down for Q1 and Q2 according to the analysts. The second half is expected to be better -- they predict Q3 additions to be between 10,000 and 16,0000, with Q4 even better at 10,000 to 22,000 more customers.

The slowdown in broadband additions has been widespread. Last week, telcos AT&T and Verizon reported 289,000 fiber additions and 294,000 broadband additions respectively. AT&T’s fiber net gain was erased by the loss of 307,000 U-verse and other advanced broadband subscribers and 17,000 digital subscriber line customers cut their ties to the company during the quarter. While wireline broadband performance was sluggish, telcos made up for it with big gains in fixed wireless -- Verizon added 194,000 FWA customers in the period, 2.5 times its additions in Q4 2021. T-Mobile said it added 338,000 fixed wireless customers in Q1, up from 224,000 additions in Q4 and 93,000 in Q1 2021.

Cahall sees the telcos, especially with fixed wireless, making an even bigger impact down the road. In a research note, Cahall wrote he expects cable broadband growth to slow to an average of 2.4% per year from 2020 to 2025 (down from 4.6% between 2017 and 2019), while fiber and fixed wireless is expected to average 12.3% and 19.6% annual growth, respectively, from 2020 to 2025. The result is that Cahall expects cable’s broadband market share to dip from 65% in 2020 to 63% in 2025, with fiber growing to 19% from 12% and fixed wireless to 11% from 5% in the same time frame.

“In short, the threat of fiber/fixed wireless is real, and its impact should only intensify as time advances,” Cahall wrote. ■

The spike in fiber construction projects — Altice USA, Comcast, Charter Communications, Frontier Communications and a handful of smaller operators all have plans to build out and expand their plant across the country over the next five years — has created a bit of a dilemma for providers. While there is money (federal grants totaling more than $65 billion have been earmarked for broadband expansion, especially in rural areas), desire (expanding footprints mean more chances to grow customers) and need (about 43% of U.S. homes have access to fiber broadband), shortages of equipment and skilled workers could throw a wrench in what many expect to be the biggest fiber buildout in the past 20 years.

For AmeriCrew, a company founded in August by former U.S. Army officer and long-time telecom executive Kelley Dunne to help fellow veterans train and establish careers in the telecommunications, clean energy and managed services industries, the worker shortage is real, and not just for people who know how to splice fiber.

“Everyone is building at once,” Dunne said. “In the process, the skill sets are converging as well. You need skilled labor out in the workforce, not to mention electricians and higher skilled laborers. I think we’re heading into the largest workforce shortage our nation has ever seen.”

He's not alone in that fear.

A ‘Huge Issue’

“Labor is a huge issue right now,” Jeff Heyner, Dell’Oro Group VP, broadband access and home networking, said. “It’s a big concern, especially for those projects that are subsidized through RDOF [Rural Digital Opportunity Fund] and the other U.S. government or state government grants. The concern there is, can they finish these projects within the time frame allotted before they have to go back and say they need an extension?”

Federal and state broadband funding programs usually have milestones and deadlines that awardees must meet in order for them to continue receiving money. For those that can’t meet those deadlines, they usually have to file for extensions to the respective government agencies, which at best means a ton of additional paperwork and at worst means giving the money back. 

Heyner said that the deficits aren’t only in the employee ranks. Supply chain issues are delaying projects as well. 

“There is still a lot of backlog of projects and it’s not like they’re slowing down any strategic initiatives they have,” Heyner said. “The projects just keep coming and they’re gated by supplies. It’s really difficult to get ahold of fiber itself, conduit, and once everything is installed, the CPE necessary to connect the subscriber. There are certainly labor shortages as well, all across the board when it comes to any technicians or outside plant folks.”

Fiber Broadband Association VP, research and workforce development Deborah Kish said her organization began hearing from its service-provider members about two years ago that they had to turn down jobs and couldn’t get installs done because they didn’t have the skilled workforce. 

“That’s kind of indicative of the telecom industry,” Kish said. “We have a lot of people who have been in the industry for 30 or 40 years, so there are a lot of people aging out. It’s a matter of how do you attract fresh, new people to do these jobs.” 

FBA, she said, launched a 144-hour fiber optic technician training course on March 29 teaching fiber theory, types of fiber, splicing , outside plant installation, FTTH installation, testing and troubleshooting. The course is about half in the classroom, half in the field, and students will emerge from the course as an advanced entry-level fiber-optic technician.

Kish said there are other training programs, from independent associations, community colleges and other educational institutions across the country, but it still might not fill the need.  

She added that the industry expects to build 1.6 million miles of fiber over the next five years. She estimated that potential job creation is in the tens of thousands to hundreds of thousands over the next several years.  

“Yes, it [the worker shortage] will delay projects,” Kish said. “That’s why it’s the right time to do this.”

Eleven of the top telecom trade associations, including the Competitive Carriers Association, the Fiber Broadband Association, INCOMPAS,  NTCA–The Rural Broadband Association, the Wireless Infrastructure Association (WIA) and CTIA, wrote Congress in February 2021 claiming that the industry will need an additional 850,000 man-years of trained fiber technician labor over a five year period to keep up with demand. In comparison, the group said the industry employed about 672,000 technicians, and to meet the short-term labor requirements will have to find and quickly train at least 250,000 new technicians.  

That same year South Dakota Republican Sen. John Thune reintroduced his Telecommunications Skilled Workforce Act bill, U.S.  which would establish a Federal Communications Commission-led interagency working group to develop recommendations for workforce needs and to empower the GAO to conduct a study to determine the specific number of workers required to fill the gap.

The bill was first introduced in February 2020 but appears to have little traction at the moment. 

“When you look at the industry as a whole, there’s simply not enough people,” CCG Consulting president Doug Dawson said, adding that the number of installations is already at record levels and continues to grow. “Somebody is going to get shorted somewhere along the line. It could be that everybody gets shorted.”

At the same time, there are groups who say there is no worker shortage at all. The Communications Workers of America, the union representing more than 150,000 wireless and wireline telecom workers, has said repeatedly that there is no shortage of workers. What has been lacking, according to the union, are decent wages as companies lay off telecom workers. 

In his February testimony before Congress, Communications Workers of America president Christopher Shelton said companies claiming a shortage of skilled workers are really lamenting a lack of non-union employees. 

“AT&T and other telecom companies have laid off tens of thousands of workers in the past few years, including thousands of well-trained construction technicians, while non-union contractor companies claim they can’t find qualified workers,” Shelton said, adding that if there truly was a deficit, wages would increase. Instead, he cited an Economic Policy Institute study that showed that wage growth has slowed over the past 40 years.

“The lowest-paid 10% of workers in telecom actually saw their wages decline by 12% in real terms since the 1970s, driven by outsourcing and the loss of union representation,”  Shelton continued. “When wireless infrastructure companies and their lobbyists start talking about workforce shortages, ask them for proof.”

Size Matters

But as big players like AT&T have the size and the muscle to bring in fiber workers, the pool is still small, meaning if one company attracts a crew, another company is left without.

Dawson, a 45-year veteran of the telecom industry, said the labor shortage depends on who and where you are. For mega-companies like AT&T and Verizon, which have nearly unlimited resources and can attract workers from around the country or train workers on their own, the ability to build a workforce isn’t as hard as it is for a small telco in a rural area.

So AT&T, Verizon and other mega-players may have a leg up on the rest of the industry in attracting work crews, “but that means 20 other smaller companies just got really screwed,” Dawson said.

The road for smaller operators is much rougher, adding that skilled workers can jump from company to company on fiber builds, landing where the pay is best. For many that means bigger companies. 

He used a small fiber project in Oregon, in a town with about 20,000 residents, that he has consulted for about two years as an example.

“During the construction process, every Monday they would make bets about how many construction crews wouldn’t show up,” Dawson said. “Because at that same time Verizon was building a tremendous amount of fiber throughout Washington and Oregon, and they would simply steal away the crews by offering them a higher rate. They weren’t at the bottom of the chain — they were building a $20 million project — but they still had a tremendous struggle trying to keep work crews. If you’re a little city with a $1 million grant, good luck.”

A Loss of Institutional Knowledge 

Dawson agreed that layoffs after the last fiber bubble burst 20 years ago have added to the paucity of fiber technicians. Between 2001 and 2005, AT&T alone reduced its workforce from 215,088 to 162,000 employees, according to the company’s 10-K annual reports. What resulted is that today, many fiber line workers are either baby boomers or Generation Z, meaning they are either about to retire or they’re too young to have much experience. And when those baby boomers retire, they take a lot of the provider’s institutional knowledge with them.

And the projects aren’t last-mile fiber builds alone, Dawson added. Independent companies like Zayo are building massive long-haul networks, cable companies continue to build fiber as they cut their nodes down, wireless service providers are all building 5G networks — which have a huge fiber component — as well as Dish Network, which as part of federal requirements for its spectrum purchases needs to build its 5G to 70% of the country by next June.  

While the available pool of workers is likely to migrate to those bigger projects, smaller companies are having to decide whether roll the dice and hope they can attract enough workers, or build projects with existing staff. Dawson pointed to one client — a municipality in Arkansas — which is doing the latter, but added it will quadruple the time it takes to build the network from one year to four years. 

“Everyone can’t build what they’re announcing, it’s impossible,” Dawson said. “Between materials, engineers, fiber splicers, there are places that are going to run into bottlenecks.” 

It’s Not Just a Job… 

While there are staffing agencies, contractors and subcontractors galore to provide skilled workers for fiber builds, training a fiber tech from scratch can take anywhere from several months to several years. And Dawson said it can take two-to-three years of being on the job before a fiber technician is up to snuff, Dawson said. 

"It's a true apprenticeship program, they're fairly worthless in the beginning," Dawson said. "Just knowing how to safely climb poles and all that, you don't learn in a day."

Workers are well-compensated for their efforts. Fiber-optic technicians make an average of $65,000 per year, according to Glassdoor.com, but depending on the location and the employer, can earn $80,000 or more annually. 

While that is enough to attract a wide range of workers from all walks of life, AmeriCrew's Dunne said he believes veterans are especially geared toward fiber work because of their focus on teamwork and getting the job done.  

For the veterans — Dunne said there are about 100 people in AmeriCrew's fiber program — the attraction is the ability to work wherever they want, to not to be tied to a desk and to build a career. 

“Sitting in a cubicle all day staring at a screen is not a job they are going to resonate towards,” he said.

If You Build It

Even the big guys have had to deal with periodic labor shortages. Almost every major telecom company has announced plans to boost its fiber diet, with AT&T predicting to extend its fiber network to 3.5 million additional homes this year, 4 million in 2023 and 30 million by 2025. Altice USA said earlier this year that it will accelerate its fiber buildout plans, extending its network to 6.5 million homes by 2025. Verizon has completed the core fiber buildout for more than 50% of its markets, so any further construction will be success-based 

Frontier Communications, which emerged from bankruptcy in April 2020, has put forth an aggressive buildout strategy, planning to pass 10 million homes with state-of-the-art technology by 2025.

Frontier chief network officer Veronica Bloodworth said at a recent industry conference that her biggest challenges in building out that network are twofold — labor and equipment.

“We have a much more diverse supply chain of labor partners than we even had nine months ago,” Bloodworth said at the conference. “I have a lot of confidence in our suppliers to meet their commitments. I feel very confident in our ability to meet our commitments. But the supply chain is much tighter than it was before.”

AT&T ran into some supply chain and staffing issues in 2021 around the fiber build — it finished the year adding about 2.6 million homes instead of the 3 million it had earlier predicted — but said that it believes it has solved any problems associated with network construction. 

At the Deutsche Bank Media, Internet & Telecom conference on March 14, AT&T chief financial officer Pascal Desroches said AT&T is in a good spot in its buildout plans. 

“Look, we’re not immune to supply chain issues, but we have first priority on supplies, we are in great position on access to labor relative to others, and what we’re seeing is while there were issues in the summer of last year those issues have been largely resolved and we exited 2021 with good momentum,” Desroches said at the conference. “That continues in 2022, so we feel really good about our ability to deliver 3.5 to 4 million new locations this year.”

But even though big players like AT&T have the size and the muscle to bring in fiber workers, the pool is still small. That means if one company attracts a crew, another is left without.

Smaller Providers Lead the Charge

Other smaller, more rural telecom companies also have aggressive buildout plans, like Shenandoah Telecommunications, which expects to pass 300,000 homes with fiber this year, and TDS Telecom, which plans to nearly double its total service addresses from 1.4 million to 2.2 million over the next five years, mainly through fiber expansion.

At the New Street Research virtual Fiber to the Future conference on March 29, TDS Telecom CEO Jim Butman said that currently, his company passes about 400,000 homes and businesses with fiber. He pledged to grow that to 1.3 million addresses in five years, adding that most of that growth will occur within TDS Telecom’s existing footprint.

“We want to protect what we’ve got in the ILEC first,” Butman said at the conference, adding that those plans don’t include efforts that could be funded through federal programs. With federal funding help, TDS could add another 100,000 to 150,000 homes to its fiber network.

Shentel had about 300,000 broadband passings at the end of 2021 — 200,000 through incumbent cable, 75,000 via its Glo Fiber offering in overbuilder markets and 30,000 through the federal Broadband Equity, Access and Deployment (BEAD) program. At the New Street Research conference, Shentel chief operating officer Edward McKay said the telecom company plans to double its Glo Fiber passings this year, growing to more than 450,000 passings by the end of 2026. 

“In total, we will grow broadband passings from 300,000 to 700,000-plus over the next five years, driven almost entirely by fiber-to-the-home expansion,” McKay said. 

And while competitors have opted to expand into more rural markets using fixed wireless technology, fueled by federal money, McKay said Shentel scrapped its fixed wireless program after it saw the amount of federal money that was pouring into its markets.

“We believe with the funding that is out there today, that will justify building fiber to the vast majority of the homes that we previously targeted for our BEAD fixed wireless,” McKay said. “We’re actually going after some of that funding ourselves.”

In the meantime, the number of wireline projects keeps growing. Earlier this month, Shentel’s Glo Fiber announced plans to expand its fiber network in Lancaster, Pennsylvania;  MetroNet announced plans to build a $130 million fiber network in Colorado Springs, Colorado; and Consolidated Communications said it will build a fiber network in Maine reaching 150,000 homes by the end of the year. 

In addition to building fiber networks for wireline high-speed Internet service, 5G wireless networks have a huge fiber component. 5G service requires a lot more towers than its predecessor technology: 5G cells have a range of about 1,000 feet, compared to 10 miles for 4G cells. 5G cells must also be connected to each other via fiber, which means a lot more fiber needs to be built. 

Dawson added that once the construction is completed, the work shortage could shift again. He said that companies will have to hire permanent fiber technicians for every 2,000 to 3,000 passings to maintain the network. 

“People will tell you there’s no shortage of them [permanent techs] right now,“ he said. ”There will be when there are 10 million more fiber passings.” ■ 

WideOpenWest shares were up more than 12% Thursday after a report in Bloomberg News claimed the Denver-based overbuilder was “exploring options” including a sale.

According to the Bloomberg report, people familiar with the matter say WOW has hired an adviser to drum up interest in the company.

WOW spokesperson Jamie Mayer declined comment, adding that the company does not comment on rumor and speculation.

WOW shares closed at $20.02 each on Thursday, up 12.5% or $2.23 per share, as investors scrambled to take advantage of a possible deal. The stock was up another 3% in after-hours trading April 7 to $20.75 each. 

Despite Thursday’s rise, WOW stock is still down about 7% for the year. 

Based in Denver, WOW has about 532,900 subscribers and last year sold systems in five markets to Astound Broadband and Atlantic Broadband (now Breezeline) for a combined $1.786 billion. WOW's largest individual shareholder is Crestview Partners, the New York-based private equity fund that counts cable pioneer Jeffrey Marcus as its vice chairman. Marcus retired as a partner at Crestview in 2019, but is still WOW's chairman of the board. The company CEO is long-time telecom executive Teresa Elder, who joined WOW in 2017. 

Full year 2021 revenue was down 1% to $725.7 million and cash flow rose 9% to $261.6 million. WOW ended 2021 with 532,900 voice, video and data subscribers, up 10,000 from the prior year. The company operates in 14 markets in Michigan, Alabama, Tennessee, South Carolina, Florida and Georgia. 

Deal multiples have risen in the past few years, with Stonepeak Infrastructure Partners’ $8.1 billion purchase of Astound Broadband one of the highest — an estimated 14.1 times cash flow. Given that multiple, WOW could be worth as much as $3.65 billion, but even at more traditional multiples of 7 times to 10 times cash flow, the company could fetch between $1.8 billion and $2.6 billion.

Possible suitors could range from private equity and other financial players to strategic buyers like Altice USA (whose bid to buy Atlantic Broadband in 2020 was rebuffed by that operator’s Canadian parent); Astound Broadband (which purchased WOW’s Anne Arundel, Maryland; Chicago; and Evansville, Indiana systems last year for $661 million); and Breezeline (which purchased WOW’s Cleveland and Columbus, Ohio systems last year for $1.125 billion). ■

Months after it reported a full year of broadband subscriber losses — the only major cable operator to do so — Altice USA continues to step up efforts to win back customers with a new campaign entitled “Let’s Reconnect,” and pledging to rebrand its Suddenlink Communications markets to Optimum later this year.

The new campaign comes after Altice USA lost about 3,000 broadband customers in 2021,  a year where although overall high-speed Internet customer growth slowed down, it was at least positive for the rest of the sector. Altice USA is in a bit of a unique competitive situation — about one-third of its footprint is within Verizon Fios territory, which has been very aggressive in winning broadband subscribers. As a result, Altice USA said it would accelerate the buildout of its fiber network and push hard to bring new services and functionality to customers. 

The rebranding and “Let’s Reconnect” campaigns are just another step in that process. Altice has already rebranded its wireless service as Optimum Mobile, and said Suddenlink subscribers in the West and Mid-Atlantic states would be receiving service under a new name in the future. That future, apparently, is now. 

“As part of Let’s Reconnect, we’re making changes to ensure that we are delivering the very best service and experience to our customers and keeping them at the center of everything that we do,” Altice said in a statement. “This means more speed and reliability through our fiber network and mobile service, 24/7 customer support online and over the phone, the opening of more retail stores across the country and so much more.”

In a letter to customers, Altice USA executive VP of consumer services Matt Marino pointed to increased internet speeds as the fiber buildout progresses; easy to understand pricing and surprise-free billing; better service through the hire of thousands of local employees and the opening of 70 new retail locations; and an increased commitment to its communities, through company donations to public schools and organizations.

“We heard you and we know it’s time to reconnect,” Marino wrote in the letter. “Though keeping you connected to what you love has always been our number one goal, we understand that we haven’t always gotten it right. So, we’re working hard to make important changes as a recommitment to you.”

Whether this will be enough to put a dent in subscriber losses remains to be seen.

Still, Altice USA is making an effort to right the ship. In addition to the fiber acceleration, the company has expanded its MVNO agreement with T-Mobile for its Optimum Mobile service, launched Optimum Stream, a 4K-capable Android TV device for free to its 1 Gigabit-per-second broadband customers, and made some management changes.  

Altice stock went into a tailspin in February after it announced plans to step up the fiber build and accelerate its edge-out program to expand its addressable footprint. Shares fell as much as 22% on February 17,ending the day down 18% to $11.83 per share from $14.40 each the day before. Since then, the stock hasn’t regained much of that ground — it closed at $12.70 each on April 4. 

In a research note in February, MoffettNathanson senior analyst Craig Moffett noted that Altice’s plans to speed up the fiber deployment and accelerate edge-outs to increase their addressable market are good signs. But Moffett added that it can no longer be assured that the company will be a grower in the long term.

“At the heart of the problem is broadband,” Moffett wrote. “Altice’s broadband subscriber growth has slowed to a stop.” 

It appears that with the new campaign, Altice is hoping to turn that perception around. ■

Altice USA named former executive VP of operations Pragash Pillai as its new executive VP and chief technology & information officer, replacing Philippe Le May, who becomes a special advisor to the company.

In a memo to employees last week, Altice USA CEO Dexter Goei said Pillai would assume the role of chief technology & information officer immediately, as well as continuing to lead the company’s operations organization.  

Goei added that PiIlai has a strong operations and engineering background and has always worked closely with the CTIO organization.

“As we look to accelerate our fiber deployment over the next several years to millions of additional homes, having both the CTIO and Field Operations organizations under Pragash’s leadership will streamline our fiber build and enable us to meet that goal efficiently,” Goei said in the memo. 

Altice USA stepped up plans to build out its fiber network across its footprint last month, pledging to pass 6.5 million homes with fiber by 2025, after reporting disappointing Q4 broadband results. Late last year it announced a change in its strategic direction, shifting several management positions and planning to rebrand the company under the Optimum name.  

Pillai has been with Altice USA and its predecessor Cablevision Systems since 2010 in various high-level operations, customer service and technology roles. Most recently he was executive VP of operations at the company and formerly served as executive VP customer experience and regional market strategy. He can trace his cable roots back to 1999 -- when he served as VP of advanced engineering, digital video for Charter Communications -- and earlier was senior VP of engineering and technology at Bresnan Communications.

Le May joined Altice USA in 2017, shortly after it purchased Cablevision Systems.  Le May signed on with a unit of Altice USA’s former parent Altice N.V. -- Altice France -- in 2006 and prior to that was head of network communications at Lyonnaise Communications.

“During Philippe’s time at Altice USA, he has been instrumental in the execution of our network and technology strategy, including the expansion of our fiber network, enabling 1 gigabit speeds across most of our footprint, and the integration of Morris and Service Electric infrastructure into our network, among other accomplishments,” Goei said in the memo. “I am grateful for Philippe’s leadership and his work to build a resilient, reliable network that enables our customers to live life connected.” ■

 The spring conference season is upon us, a time of new beginnings, when nature and CEOs of major media companies show the world just what they have been hiding under their drab little husks for the past four months. For nature, the metamorphosis bursts forth in an explosion of color, new life and possibilities. For cable CEOs, it comes in a series of presentations and fireside chats with the investment community to prove their businesses aren’t going to die this year.

Investors have been lining up for cable’s funeral for decades. The industry’s death rattle supposedly began in the nineties with competitive threats from satellite TV and telcos. Now streaming video, direct-to-consumer offerings that bypass the traditional bundle and fixed wireless access service that is expected to steal away broadband customers are expected to deliver the fatal blow. But instead, every year cable survives. It weathered the satellite onslaught, the multiple attempts by AT&T to weasel its way into the video business, and by the looks of things, it is preparing itself to ride out the latest storms. 

I’m not saying cable, or any industry, is invulnerable. Taking even a cursory look at the industry is proof that the business is nothing like it was a decade ago. But unlike buggy whips and the Betamax, whenever the collective consciousness began to stray, cable operators have for the most part managed to figure out a way to make themselves attractive again to consumers. 

In the past century, cable pushed back video competition by introducing more channels, more choices and better pictures through digital and later HDTV offerings. Later, competitive wireline phone offerings, high-speed internet service and in the past few years, mobile service have helped the industry not only survive, but thrive. Now cable companies have twice as many broadband customers as video subscribers, and mobile service, once thought of as merely a retention tool, is becoming a real threat to traditional carriers. In the meantime, cable continues to invest in the business, build out fiber networks and reinvent itself.

Even though those moves are far from secret, operators continue to make the seasonal rounds, reminding investors that although they may not be the latest thing, they are what makes that latest thing work.

Investor Conference Rites of Spring

March is the traditional beginning of the spring conference season (I know spring doesn’t officially begin until March 20, but it was 74 degrees in New York this week, for gosh sake), with Morgan Stanley's Technology, Media & Telecom conference on March 7, and Deutsche Bank Securities hosting the next media get-together on March 14. There is expected to be a bit of a reprieve in April, followed by MoffettNathanson’s Media & Communications conference and J.P. Morgan’s Global Technology Media & Communications conference slated for May. Evercore ISI should wind down the spring season with its TMT event expected sometime in June, although others could be sprinkled in between. And then the fall season starts.   

Already, CEOs of the top three publicly held cable companies have hit the conference circuit and have had to reassure investors that: Yes, they still intend to add broadband subscribers; no, they haven’t given up on video quite yet; and yes, mobile service is on the path to becoming profitable.

Comcast chairman and CEO Brian Roberts kicked off the spring season with his March 7 appearance at the Morgan Stanley conference, He spent most of his time telling the investment community that while broadband growth is indeed slowing down, it has lots of runway ahead of it. He pointed to four areas where he sees Comcast can boost broadband growth: expanding its footprint; competing more aggressively; bundling with other products like wireless; and growing its business services reach.

Comcast has been expanding its reach to about 1 million more homes per year within its footprint through edge-out programs. This year, he expects that expansion to be even greater, given government initiatives to build out unserved and underserved rural areas. 

“Where it's been uneconomic previously, it will be economic in the future for us to extend our broadband,” Roberts said. “And we're going to compete aggressively to do that.”

Roberts also defended cable broadband against the latest competitive threat — fixed wireless access from the telcos — adding that at the moment it is an inferior product to high-speed data service from cable, reminding the audience again that cable has a history in pushing back competitive threats. 

“We don't take it for granted, but we've seen lower-price, lower-speed offerings before,” Roberts said. “And in the long run, I don't know how viable the [FWA] technology holds up.”

Altice USA CEO Dexter Goei, who has been dealing with a steep drop in his company’s stock price since it lost broadband subscribers in 2021, spent his time at the Morgan Stanley conference reiterating plans to accelerate its fiber network buildout, and hinting about faster speeds becoming available to a wider swath of customers. 

Altice‘s accelerated fiber rollout has been well-documented, and Goei said at Morgan Stanley that it is expected to make a big difference. 

Goei said Altice has been talking about fiber for three years, and the slowdown in deployment has been a combination of permitting and COVID-19 related delays and the company’s inability to “get its own ducks in a row.” But now with a restructured management and a clearer focus,  growth is expected to take hold in 2023.     

“The goal was to reinvigorate distribution, rebrand the company, address some customer service-related issues we were dealing with and make that a one-time investment,” Goei said, which “leads to a nice payback in 2023.”

Goei hinted at “multi-gig” speeds for its Optimum broadband service in the second quarter, stopping short of saying just how fast its offering would be. But the company has said publicly — back in May 2021 at the MoffettNathanson Media & Communications conference — that its goal was to offer 10 Gigabit per second broadband within 18 months.       

On the video side, Charter Communications chairman and CEO Tom Rutledge said there is “more damage to come” regarding continued customer losses, but all is not lost quite yet.

“There’s nothing about the old model that’s really changed, Rutledge said at the Morgan Stanley conference, adding that prices for traditional video service continue to rise, driven by ever-increasing sports rights fees. “There’s nothing to really constrain the cost of live sports in the linear business and that’s still the glue that holds it together. I see that business continuing to get more and more expensive for consumers.”

Eyeing a Mobile Future

Despite the shift toward streaming, Rutledge isn’t expecting the pay TV business to change that much over the next few years. But he echoed Roberts in saying that the mobile/broadband bundle will be the future. And he acknowledged that he often thinks of how cable could eventually aggregate and package streaming services for consumers. 

“The opportunity going forward is to start to reaggregate and use that aggregation to give a better, more cost-efficient consumer experience to more people,” Rutledge said. “We think about that every day and how that might happen. I don’t want to be overly Pollyannaish and say that is about to happen because the current model is still very much in force. I don’t see that disappearing in the next couple of years.”

But Rutledge said Charter is laying the groundwork for that day when it does come, making itself available on apps like Roku, where it is one of the most used applications. He added that nearly 12 million customers access Charter services (broadband-only as well as video) via an app instead of a set-top box.

“The upside is still yet to be realized,” Rutledge said. “The reaggregation is somewhat far away, but we’ve been thinking about how to build a platform that can be used by customers  in a more efficient way.” 

It’s a concept that has been well-documented in this column over the past year, and a place where, whether participants say it aloud or not, the industry is headed. But it is also an example of something that cable has been famous for, at least during the 30 years I’ve been covering it: No matter what gets thrown at it, this industry has managed to adapt. It sounds a lot easier than it is to do, and the landscape is littered with the carcasses of companies that underestimated the resilience of this business. This March and beyond, cable executives will get to remind investors of that fact once again. ■

Altice USA said its average broadband-only user gobbled up 556 gigabytes of data each month in the fourth quarter and that 14% of its customers exceeded 1 terabyte of 1s and 0s monthly consumption.

According to Altice USA CEO Dexter Goei, video streaming remained the biggest driver of the surge in internet usage. 

Also read: Altice USA Accelerates Fiber Buildout as Broadband Slide Continues

With high-bandwidth video technology standards including 4K and HDR becoming ubiquitous, and cord-cutting customers increasingly forsaking the managed networks of telecom company pay TV suppliers for the open internet to get their TV, Altice's gawdy user numbers don't appear, at least on the surface, to be all that surprising. 

But when you consider the recent growth in usage, the ol' eyebrows do get raised a little. 

In May 2019, broadband networks consultancy OpenVault said that nationally, internet-only homes were using 395.7 GB a month, on average. 

A year ago, OpenVault published a report suggesting that by the end of 2021, the average U.S. broadband consuming household -- including those subscribers who took video over managed network from their ISP -- would consume as much as 650 GB each lunar cycle. 

The level of demand on Altice USA's networks didn't match that lofty prediction, but the cable operator's current customer usage levels are being used to justify the company's huge ongoing investments into fiber-to-the-home infrastructure. 

"All of this gives us confidence we're making the right decision focusing on fiber to prove -- to future proof our network given it's the best technology that exists to support high levels of throughput and data usage with very low latency and very high reliability of service," Goei said Wednesday during Altice USA's Q4 earnings conference call with equity analysts. 

Altice USA said it will accelerate its fiber-to-the-home buildout efforts, planning to pass 6.5 million homes by 2025 with the state-of-the-art network, after a year where it saw broadband customer additions creep into negative territory.

Altice USA lost about 2,000 broadband customers in Q4 and shed 3,000 for the full year, not including numbers from its most recent acquisition, Morris Broadband.  If Morris Broadband subscribers are included, Altice USA said it would have added 27,000 broadband customers for the full year.

The broadband slide helped drive revenue down 0.6% in the quarter to $2.52 billion, while adjusted EBITDA fell 5.9% to $1.1 billion. For the full year, revenue rose 2% to $10.1 billion and adjusted EBITDA was relatively flat (up 0.3%) at $4.43 billion.

Altice USA stock fell about 3.5% in after-hours trading Wednesday to $13.59 per share. So far this year, the stock is down about 16%.

The company has struggled with broadband subscriber metrics over the past few quarters as it has competed with aggressive promotions from Verizon’s Fios product, losing about 13,000 customers in Q3. Late last year it announced a change in its strategic direction, speeding up fiber deployment, shifting several management positions and planning to rebrand the company under the Optimum name. 

Also: Did Altice USA Cut Costs Too Much?

"We are pleased to conclude 2021 having made progress on our growth strategies by accelerating the enhancements of our network, product and customer experience,” CEO Dexter Goei said in a press release. “We see customer trends improving as we continue the expansion of our sales distribution channels and recently launched our planned competitive converged internet and mobile offerings. Today we also announce a new plan to bring 100% fiber broadband, delivering multi-gig speeds, to more than two thirds of our entire footprint over the next four years, reaching a total of 6.5 million FTTH passings by the end of 2025. We are confident in our strategy and that our focus on these key initiatives will drive long-term sustainable growth and value.” 

Altice had said earlier it had to scale back its fiber rollout in order to adhere to pandemic related protocols. Now that many of those restrictions are being lifted, it can step up its efforts to build out the network. 

Also: Analyst Makes Case for Altice USA to Go Private 

Altice USA said the new fiber expansion should allow it to cover about two-thirds of its total footprint in the next four years and will include about 2.5 million additional passings in its Suddenlink markets and 4 million in its Optimum locations. Altice began building out its fiber network in the Optimum footprint mainly in New York, New Jersey and Connecticut several years ago and currently passes about 1.2 million homes with fiber in those areas. In its Suddenlink markets, construction is expected to begin this year in six communities in Texas -- Abilene, Amarillo, Bryan-College Station, Lubbock, San Angelo, and Tyler -- expanding later into parts of Arizona, California, Louisiana, Missouri, North Carolina, New Mexico, Oklahoma, and West Virginia.

“Altice USA is proud to announce plans to invest further in our fiber deployment strategy by accelerating the build of a 100% fiber broadband network capable of delivering multi-gig speeds across our Optimum and Suddenlink footprint,” Goei said in a press release. “Fiber is the future and given the progress we have made at Optimum with our fiber expansion, we’re excited to build on that success and break ground later this year at Suddenlink to bring our advanced network to more customers and communities.” ■ 

Altice USA said it has promoted Keith Bowen, Altice News & Advertising chief revenue officer, to president of the unit, replacing Jon Steinberg who will leave the company in the spring.

Bowen will now have responsibility for Altice USA news brands Cheddar News, News 12 and i24NEWS as well as the a4 advanced advertising and data business. Before joining Altice USA in 2019, Bowen served as chief revenue officer for Spectrum Reach and earlier served in similar roles for Tribune Media and Urban One (formerly Radio One). He will report to Altice USA CEO Dexter Goei.

“Since joining Altice USA in 2019, Keith has helped our news and advertising businesses experience significant growth and success, and I am confident that the division will continue to flourish under his leadership,” Goei said in a press release. “Jon’s enthusiasm and keen business mind have helped our News & Advertising group achieve great success over the last three years and I offer my gratitude to him and look forward with excitement as Keith brings his invaluable expertise to our news and advertising groups.”

Steinberg founded Cheddar in 2016 and joined Altice USA in 2019 as part of the company’s purchase of Cheddar News. He will serve as an advisor to Bowen over the next several months in advance of his departure this spring, and, after a period of transition, will return to his entrepreneurial roots.

“Jon has been a great mentor for me over the last several years, and I’m excited to now step into his shoes to lead the amazing teams that we have in place at Cheddar News, News 12, i24NEWS and a4,” Bowen said in a press release.

Separately, Altice USA said it has named Kristin Malaspina GM of Cheddar News and senior VP of distribution for Altice News and will be responsible for Cheddar News’ content, growth and operations while continuing to lead the distribution teams across all Altice News brands. She will report directly to Bowen. Malaspina previously served as senior VP of marketing & partnerships for Altice News & Advertising, and, before that, worked for Starz and also spent several years at Time Warner Cable/Spectrum News in various executive marketing and distribution positions.

“I am thrilled to take on the opportunity to lead the Cheddar News team as we further establish the network as a leading source of news for the forward-looking viewer,” Malaspina said in a press release. “Cheddar News has become an important brand among today’s most discerning news viewer, and I’m excited to help lead the incredibly talented Cheddar News team as we look to continue to deliver the exceptional news reporting that our audiences have come to know and love.”

Malaspina joined Altice USA in 2017 as senior VP, marketing and partnerships, overseeing all marketing, branding, partnerships, event opportunities and distribution for the Altice News & Advertising brands. Prior to that, she was VP of distribution marketing, strategic partnerships for Starz as well as VP of marketing for Spectrum Networks. Earlier in her career, Malaspina served as director, product marketing and customer communications for iNDEMAND Networks and at CBS Inc. in a variety of production roles.

“In looking back on my time leading both Cheddar and the Altice News & Advertising group, I remain immensely proud of the work that our teams have done in serving our viewers with the highest quality news reporting and our clients with innovative advertising products,” Steinberg said in a press release. “As I take my next entrepreneurial step, I leave the Altice News & Advertising group, including Cheddar News, in extremely capable hands in Keith and Kristin and look forward to watching what they do next.”

 Also: Analysts Search for Meaning in Altice USA Leadership Change 

Steinberg’s stepping down is the latest in what have been several management changes over the past few months at Altice USA as it moves to consolidate its brands and beef up its connectivity offerings, beginning in September, when chief operating officer Hakim Boubazine resigned. In December, Altice hired former JP Morgan Chase exec Ben Collier as senior VP of brand, marketing and media, and executive VP of government and community affairs Lee Schroeder said she would step down in July. Earlier this month the company named former Comcast exec Shuvankar Roy senior VP of customer experience. ■

Cable operators, already gearing up for a slowdown in broadband subscriber growth in the fourth quarter, are likely to see a slight overall deceleration of mobile phone customer additions in Q4, driven by lighter numbers at Charter Communications, according to J.P. Morgan media analyst Phil Cusick.

Cable operators have already warned that the expected slowdown in broadband customer growth could get steeper in Q4. Comcast Cable CEO Dave Watson told a virtual audience at the UBS TMT Virtual Conference in December that it would likely add about 1.3 million broadband customers in 2021, implying that Q4 additions would be about 185,000, its lowest quarterly growth since Q2 2017. Watson was echoed by other cable execs at the conference like Altice USA CEO Dexter Goei, who implied that Q4 broadband subscriber growth could be negative in Q4 and for the year. 

But mobile service was expected to continue its torrid growth pace. Comcast’s Watson predicted that his company would add a record number of mobile customers in the quarter, beating its previous best of 285,000 additions in Q3 2021.

Also: Comcast Q4 Broadband Results Narrowly Miss Consensus; Dividend Upped

In a research note Thursday, Cusick wrote that he expects Comcast to surpass that old mark, adding about 300,000 mobile customers in Q4, ending the year with 1.14 million additions. But he believes Charter will add about 260,000 mobile subscribers, below the 315,000 it added in Q4 2020. He estimated Altice USA would add about 2,000 mobile customers in the quarter, down from 7,000 in Q4 2020. 

Overall, Cusick expects cable to add about 562,000 mobile customers in Q4, implying a 20%  share of total growth for the sector in the period, compared to 23% in Q4 2020. For the full year, Cusick estimates that cable will add 2.23 million mobile customers, or about 24% of total ecosystem growth, compared to 35% in 2020. 

Cusick sees the slowdown continuing into 2022, forecasting that Comcast mobile subscriptions will be about 1.047 million next year, and Charter slipping to 1 million additions. Cusick predicted that Altice USA would grow mobile customers by 29,000 in 2022, up from 13,000 in 2021. 

Also: Charter Falls Short of Broadband Subscriber Targets, Wireless Soars

Other analysts have revised their Charter estimates as well. In a January 3 report, Bernstein media analyst Peter Supino pointed to a possible industry-wide mobile deflation risk, and revised his expectation for Spectrum Mobile subscriber additions to 252,000 from 277,000 in Q4.  

The answer should come in the next few weeks. Comcast is scheduled to report Q4 results on January 27, with Charter reporting on January 28. Altice USA has not said yet when it plans to release Q4 results, but usually does so in early February.   

Cable operators have been aggressively pricing mobile service in the past year — Comcast dropped monthly pricing to $30 per month per line for four lines minimum in April — and have added device promotions and discounts for customers that switch service.

According to Cusick, Comcast’s Xfinity Mobile now offers up to $400 in device credits for any iPhone 13 users that switch — double its prior offer. Cable companies also have benefitted from their ability to bundle wireless service with broadband, which has had a big impact on wireless customer growth. 

Also: Analyst Says It’s Time to Take Cable's Wireless Seriously  

Cusick added that his estimates for Charter could be a bit low, given the operator’s aggressive discounting in October, dropping monthly charges for two lines or more to $29.99 from $45 per month. And Charter CEO Tom Rutledge has said he sees the wireless business as a huge catalyst for the future.

Back in December at the UBS conference, Rutledge did not offer any future subscriber growth guidance but said that going forward, the biggest growth driver for the business overall is mobile. 

And both Charter and Comcast have seen the benefits of bundling broadband and mobile, with efforts to pair the two more aggressively beginning last year.  

At the same time, the Big Three (AT&T, Verizon and T-Mobile) wireless players are beginning to see their subscriber dominance wane. AT&T, which Cusick expects to more than triple its wireless subscriber additions in 2021 to 3.19 million from 1.46 million in 2021 — largely due to aggressive device promotions — will see that growth dip to 2.35 million additions in 2022. He predicted that Verizon, which should nearly double its mobile additions in 2021 to 1.101 million from 667,000 in the prior year, will fall back to about 875,000 additions in 2022. T-Mobile, which is expected to add 2.917 million mobile customers in 2021 — up from 1.87 million in 2020, will add 2.4 million in 2022 according to Cusick. ■

AT&T’s WarnerMedia and Altice USA have reached a new long-term renewal of their distribution agreement, sources familiar with the situation said.

The agreement covers the former Turner cable networks including TBS, TNT, Cartoon Network and truTV.

Financial details were not disclosed.

WarnerMedia’s HBO Max is carried under a separate agreement.

On Monday, WarnerMedia announced a similar carriage deal with Comcast. In that deal, Comcast agreed to carry CNN Plus, the new streaming news service, when it launches later this year.

CNN Plus was not included in the Altice deal, but the streaming service could be added in a separate agreement. 

For WarnerMedia, the deals might represent a closing of the books. AT&T is selling off the expensive media properties it acquired and WarnerMedia will become part of Discovery.

The Discovery-WarnerMedia combination will be headed by David Zaslav, a former head of NBC Cable. Zaslav has long complained that Discovery’s share of cable distribution fees is smaller than its share of cable viewing because it does not have the leverage that owning TV stations or sports rights brings. Owning WarnerMedia could bring more clout to Discovery in the marketplace.

Also: Top Distribution Executives Leaving at WarnerMedia

The deals may also be an audition for WarnerMedia’s distribution team. Discovery is looking for billions in cost savings when it combines with WarnerMedia and distribution is one area ripe for consolidation.

According to MoffettNathanson, Turner’s cable affiliate fees were down 2.5% to $1.56 billion in the third quarter. ■

After a two-year run where stocks in the sector nearly tripled, riding a wave of unprecedented broadband growth, cable shares wiped out in 2021 amid fears that the slowdown in high-speed internet customer growth will be worse than even the most pessimistic analysts expect.   

Only one cable distribution stock appreciated during 2021 — WideOpenWest — and that was mainly due to its M&A activity. WOW shares nearly doubled to $20.87 on Dec. 21 from $10.67 on Dec. 31, 2020, fueled by its decision to sell off systems in two separate deals with Atlantic Broadband and Astound Broadband that brought in a combined $1.8 billion. While those deals and some private transactions helped to boost overall valuations for the sector, it had little effect on other publicly traded stocks, which have been rocked by concern that the inevitable slowdown in broadband growth would be worse than originally expected

Cable companies saw unprecedented broadband growth in 2020, fueled by the pandemic and stay-at-home orders that forced Americans to work, play and go to school from home. But in 2021, as students began to return to class and workers to their offices, that growth began to slow. In Q3, broadband subscriber additions were  well below expectations and fueled concerns that Q4 growth could be even weaker.

That all had an effect on cable distribution stocks, which despite WOW’s dizzying rise, fell a collective 17.5% in 2021. Altice USA was the biggest decliner, dropping 52.1% for the year after reporting a loss of broadband customers in Q3 and hinting that Q4 could be negative as well. Altice was followed by Cable One, which saw its stock drop 22.2% in 2021 after five years of double-digit increases. Rounding out the sector was Comcast, down 5.6% for the year and Charter Communications, down 2.6%. 

Media Struggling Overall

While doom and gloom has enveloped the cable business, no sector in the media business was spared. Telco and satellite stocks dropped nearly 8% for the year despite speculation that AT&T, T-Mobile and Verizon Communications would begin to chip away at cable’s broadband lead with increased investment in fiber networks. Dish Network, which pushed the launch of its first wireless market to early 2022, fared the best, dipping less than 1% for the year to $32.04 per share from $32.34 each on December 31, 2020.

Programming stocks, which were boosted earlier in the year by direct-to-consumer offerings, felt the pain later in the year as their subscriber rolls began to soften. Like distributors, programmers saw only one stock rise for the year -- Fox Corp., which increased about 28% from $28.77 per share to $36.90 each. But that still wasn’t enough to offset declines at other programmers, with the sector down about 11.6% for the year.    

MoffettNathanson principal and senior analyst Craig Moffett has called the concern that the telcos’ attack on cable broadband will lead to an equally bloody cable advance on wireless, the Convergence Apocalypse. But he sees the risks posed to both sectors as asymmetric, adding that cable is in a superior position on nearly every dimension. 

In a handful of reports Moffett showed that not only does cable have better mobie virtual network operator (MVNO) economics — its margins should hold even after substantial price cuts — but its coverage is better because its wireless service can be bundled with broadband virtually everywhere.  

“By contrast, Verizon can bundle their national wireless service with fiber in only 11% of the country,” Moffett wrote. “AT&T can bundle their national wireless service with fiber in only 13% of the country. Tying a national service to a tiny wireline footprint would be a nonsensical strategy.” 

Also: Fear of, Desire For M&A Drives Cable Stocks in Q2 

Moffett isn’t suggesting that the broadband slowdown won’t happen. He just believes it won't be as bad as some are predicting. 

“The forces arguing for a slowdown aren’t going away, and any serious forecast has to assume steady deceleration,” Moffett wrote. “But it is possible to be too pessimistic.”

Ready for the Downturn

He noted that cable operators have been preparing for the slowdown for years, and they are steadily expanding their networks through edge-outs and other means to increase the number of homes they can market for service. 

For example, he pointed to Charter, which is growing its homes passed by about 2%, or 1 million homes per year. About 600,000 of those additional homes are via edge-outs, and Moffett estimated that assuming reasonable penetration rates, that alone could mean an additional 500,000 net additions per year.    

“And that’s before their footprint expansion from RDOF [the Rural Digital Opportunity Fund], the rural subsidy program that will add yet another million homes passed to their footprint over the next five years,” Moffett wrote. 

Barclays Group media analyst Kannan Venkateshwar wasn’t so sure. In a Dec. 20 note to clients, Venkateshwar wrote that he sees telcos having a broadband advantage over cable next year. He estimated that Comcast and Charter, the two largest cable companies in the country, could each add less than 1 million broadband customers each in 2022, their lowest growth levels ever.

While telcos could account for the bulk of 2022 broadband growth with a combination of fixed wireline and fixed wireless offerings, Venkateshwar noted that if the cable-telco broadband gap widens in 2022, cable operators are not likely to take that switch sitting down and could step up pricing discounts to attract share.

Also: Rutledge Says Cable Mobile Service Pricing Could Drop Further 

That could be risky, though, because Venkateshwar noted that the marginal costs for delivering fixed wireless is a lot lower for telcos.

“Therefore, telecom companies will be more incentivized to price fixed broadband at attractive levels instead of re-pricing their wireless back books to compete with cable,” Venkateshwar wrote. “We also believe cable companies have fewer degrees of freedom on wireless because of a locked-in variable cost structure which limits their ability to respond to handset promotions from wireless operators.”

But he added that might depend on the size of the volume based wholesale pricing stepdown embedded in the cable companies’ MVNO agreements. Both Charter and Comcast recently restructured those agreements with Verizon. 

“If cable companies have more operating leverage than usual MVNO deals because of their recent wholesale deal modification with Verizon, then the competitive backdrop for both wireless and wireline broadband could get equally bad,” Venkateshwar wrote.

Also: Metaverse or Meh-taverse?

On the technology side, the so-called FAANG stocks — Facebook, Amazon, Apple, Netflix and Google — did well, with the sector up a collective 16.8%. Apple had the largest percentage gain (31.2%), followed by Facebook (now Meta), up 22.3%; Netflix (11.9%) and Amazon (4.6%). ■