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Acquisitions Help Soften the Blow for Altice USA in Q2

Altice USA building
(Image credit: Altice USA)

Altice USA’s recent acquisition of a regional fiber-optic broadband service provider helped offset organic customer losses in the second quarter, as revenue rose 1.7% to $2.52 billion and cash flow growth was flat at $1.1 billion in the second quarter. 

Altice said unique customer relationships were down by 12,000 in the period, but showed a gain of 23,000 unique customers when 35,000 subscribers from its most recent acquisition -- Morris Broadband -- is included. Altice USA purchased Morris broadband in April in a deal that valued the North Carolina company at $310 million. 

Organic broadband subscriber growth was flat in the period, but increased to a gain of 30,000 customers when Morris Broadband data was included. That compares to a gain of 70,000 broadband subscribers in the prior year. 

The same held  true for video customer losses -- down 48,000 organically in Q2, or 36,000 when Morris Broadband’s 12,000 video customers are considered. Altice USA lost 35,000 video subscribers in Q2 2020.

Also Read: Analysts Brace for Broadband Slowdown 

Residential revenue growth was spurred by a 7.8% rise in broadband sales and a 36.4% spike in News & Advertising revenue, supported by a strong recovery in local, regional and national advertising plus additional political advertising revenue from the New York mayoral and New Jersey  gubernatorial races.

At its Optimum Mobile service -- which was rebranded earlier this month  -- revenue rose 4% to $20.7 million as the company added 5,000 new customers. Optimum mobile ended the period with 180,000 customers, reaching about 3.8% of Altice USA’s residential customer base. 

Altice USA said that broadband-only customer usage averaged about 558 Gigabytes per month in Q2, a 26% increase and that the average broadband speed taken by customers has nearly doubled over the past three years to 316 Megabits per second in Q2. More than half of its broadband customers subscribe to speeds of 200 Mbps or less, representing an opportunity to upsell to faster service, the company said. 

Altice USA said it continues with its fiber-to-the-home upgrade plans, adding that at the end of the quarter it covered about 1.1 million homes with FTTH technology available for service. FTTH sell-in to new customers is at about two-thirds of net additions in areas where the technology is available, the company said.  Penetration of FTTH passings grew to 4.3% compared to 1.0% in Q2 2020. 

Altice said it also is moving forward with its edge-out program, adding 127,000 homes passed in the quarter (39k homes passed excluding Morris Broadband) and 315,000 homes passed in the past twelve months (160,000 homes passed excluding the acquisitions of Morris Broadband and Service Electric Cable T.V. of New Jersey). 

“As the states and businesses in which we operate have been reopening more widely, Altice USA has seen an acceleration in revenue growth led by advertising and business services,” CEO Dexter Goie said in a press release. “Our residential business remains extremely focused on achieving faster broadband customer growth going forward from a faster pace of footprint expansion and network upgrades including fiber. We are delighted to have announced recently the new Optimum Mobile brand as the first step in the company’s plan to align all its connectivity brands under one national Optimum brand, and we continue to invest in innovative new products such as Optimum Stream to support increased video streaming activity which is driving broadband data usage.”

Mike Farrell

Mike Farrell is senior content producer, finance for Multichannel News/B+C, covering finance, operations and M&A at cable operators and networks across the industry. He joined Multichannel News in September 1998 and has written about major deals and top players in the business ever since. He also writes the On The Money blog, offering deeper dives into a wide variety of topics including, retransmission consent, regional sports networks,and streaming video. In 2015 he won the Jesse H. Neal Award for Best Profile, an in-depth look at the Syfy Network’s Sharknado franchise and its impact on the industry.