Altice USA, a leading provider of broadband, video, and mobile services, has been on a transformative journey, leveraging its strategic network investments and operational efficiencies to enhance its competitive position and drive sustainable growth. With a focus on fiber expansion, multi-gig service rollout, and the integration of 5G technology, Altice USA is poised to capture the increasing demand for high-speed, reliable connectivity across its diverse customer base.
Business Overview and History
Altice USA was incorporated in Delaware on September 14, 2015, and is majority-owned by Patrick Drahi through Next Alt. S.à.r.l. The company operates as a holding company and does not conduct any business operations of its own. Altice USA's journey began with the acquisition of Cequel Corporation (Cequel) by Altice Europe on December 21, 2015. Cequel was then contributed to Altice USA on June 9, 2016. Shortly after, on June 21, 2016, Altice USA acquired Cablevision Systems Corporation (Cablevision).
Through CSC Holdings, LLC, a wholly-owned subsidiary of Cablevision and its consolidated subsidiaries, Altice USA principally delivers broadband, video, and telephony services to residential and business customers, as well as proprietary content and advertising services in the United States. These strategic acquisitions expanded the company's footprint, strengthening its presence in the New York metropolitan area and various markets in the south-central United States.
Since its inception, Altice USA has been committed to delivering exceptional customer experiences through a network of approximately 9.8 million total passings as of December 31, 2024. The company's hybrid fiber-coaxial (HFC) and fiber-to-the-home (FTTH) infrastructure have been the backbone of its service offerings, providing broadband, video, telephony, and mobile services to approximately 4.6 million residential and business customers across 21 states.
Altice USA's financial performance has been characterized by a diversified revenue stream, with residential broadband, video, and telephony services accounting for 41%, 32%, and 3% of the company's consolidated revenue, respectively, in the fiscal year ended December 31, 2024. Additionally, the company's business services and wholesale segment contributed 16% of total revenue, while news and advertising revenue and other revenue accounted for 5% and 1%, respectively.
In 2019, Altice USA launched a mobile service using its own core infrastructure and infrastructure mobile virtual network operator (iMVNO) agreements. This new mobile offering exposed the company to regulatory risk, as the FCC or other regulatory authorities could adopt new or different regulations that apply to the company's services. Additionally, Altice USA has had to navigate programming contract renewals, which can be difficult as broadcast and sports programming costs continue to increase significantly. Disputes with programmers and the inability to retain or obtain popular programming can adversely affect the company's relationship with customers and lead to customer losses.
Despite these challenges, Altice USA has achieved several milestones. In 2020, the company sold a 49.99% stake in its Lightpath Fiber Infrastructure business to Morgan Stanley Infrastructure Partners, forming a strong partnership to drive growth. Lightpath's fiber network has since expanded, and the business has seen strong performance, with revenue acceleration and growth in its hyperscaler customer segment.
Network Expansion and Technological Advancements
One of the key drivers of Altice USA's growth strategy has been its ongoing investment in network infrastructure. In 2024, the company grew its total footprint by over 2%, adding 210,000 new passings and achieving its target of 3 million fiber passings. This expansion, coupled with the deployment of multi-gig technology, has enabled Altice USA to offer symmetrical speeds of up to 8 gigabits per second (Gbps) through its FTTH network, as well as download speeds of up to 2 Gbps on its upgraded HFC network.
The company's commitment to network superiority has been recognized by industry accolades, with Optimum Fiber being ranked as the fastest and most reliable internet service in New York and New Jersey, and the network with the lowest latency and best gaming experience in New York, New Jersey, and Connecticut.
Altice USA's strategic focus on fiber expansion and multi-gig service rollout positions the company to capitalize on the growing demand for high-speed, low-latency connectivity, particularly as remote work, online learning, and data-intensive applications continue to drive consumer and business requirements.
Furthermore, the company's integration of 5G technology into its mobile service offerings has been a key focus area. In 2024, Altice USA's mobile service revenue grew by 52%, underscoring the strong customer demand for seamless connectivity across various devices and locations.
Financial Performance
In the fiscal year ended December 31, 2024, Altice USA reported total revenue of $8.95 billion, a 3.1% decline compared to the prior year. This decrease was primarily driven by a 4.6% decline in residential revenue, which was partially offset by growth in mobile service revenue (52%), news and advertising revenue (8.6%), and other revenue (22.5%).
Despite the revenue decline, the company's adjusted EBITDA stood at $3.4 billion, representing a 5.4% year-over-year decrease. Altice USA's focus on operational efficiency and cost optimization initiatives, including the leveraging of AI and digital solutions, helped to mitigate the impact on profitability. Excluding one-time impacts, the underlying adjusted EBITDA would have been down around 4.4% year-over-year.
The company's free cash flow generation remained strong, growing by 23% to $149 million in the fiscal year 2024. Excluding certain one-time impacts, free cash flow would have been $192 million, up 28%. This was achieved through disciplined capital expenditure management, with cash capital expenditures declining by 16% year-over-year to $1.4 billion, representing a 25% improvement over 2022.
For the fourth quarter of 2024, Altice USA reported revenue of $2.24 billion and a net loss of $54.12 million. Year-over-year, revenue declined 2.9% due to decreases in residential broadband, video, and telephony revenue, partially offset by growth in mobile service revenue, news and advertising revenue, and other revenue.
Liquidity
As of December 31, 2024, Altice USA maintained a solid liquidity position, with approximately $1 billion in available liquidity through undrawn revolver capacity and cash balances. The company's weighted average cost of debt stood at 6.7%, with a weighted average life of debt of 4.1 years and 74% of the debt stack fixed.
Altice USA had $256.53 million in cash and $1.70 million available under its revolving credit facility as of December 31, 2024. The company's debt-to-equity ratio is -53.94, while its current ratio and quick ratio both stand at 0.324.
Residential Services
Altice USA principally provides broadband, video, telephony, and mobile services to residential customers across its footprint. In 2024, the company had approximately 4.17 million total residential customer relationships, with 4.00 million broadband customers, 1.88 million video customers, and 1.27 million telephony customers.
Broadband Services: Altice USA offers a variety of broadband service tiers to meet the needs of its residential customers. The company currently provides symmetrical speeds up to 8 Gbps for its FTTH broadband service, which is available to approximately 3 million homes. Additionally, the company is deploying Smart WiFi 6 and 6E routers to provide whole-home WiFi coverage for its customers.
Video Services: Altice USA's Optimum TV video service delivers broadcast stations, cable networks, over-the-top (OTT) services, and advanced digital video features like video-on-demand, HD channels, digital video recorder, and pay-per-view. The company also provides app-based solutions for TV, including a companion mobile app and the Optimum TV app on Apple TV and Optimum Stream.
Telephony Services: Altice USA offers unlimited local, regional, and long-distance calling within the United States, Canada, Puerto Rico, and the U.S. Virgin Islands through its VoIP telephone service. The service includes popular calling features such as caller ID, call waiting, and enhanced emergency 911 dialing.
Mobile Services: In 2019, Altice USA launched a full-service mobile offering to consumers across its footprint. The mobile service provides data, talk, and text, and is delivered over a nationwide network with LTE and 5G coverage through the company's MVNO agreement with T-Mobile. Customers can bring their own devices or purchase or finance a variety of phones directly from Altice USA.
The residential services segment accounted for approximately 77% of Altice USA's total revenue in 2024, with broadband revenue contributing 41%, video revenue 32%, telephony revenue 3%, and mobile service revenue 1%.
Business Services
Altice USA offers a wide range of products and services to both large enterprise and small and medium-sized business (SMB) customers, including broadband, telephony, networking, video, and mobile services. As of December 31, 2024, the company served approximately 376,600 SMB customers across its footprint.
Enterprise Customers: Altice USA's enterprise fiber business, Lightpath, provides ethernet, data transport, IP-based virtual private networks, internet access, telephony services, and managed services such as hosted telephony, managed WiFi, and managed collaboration. Lightpath had approximately 16,800 locations connected to its fiber network as of the end of 2024.
SMB Customers: For SMB customers, Altice USA offers broadband with speeds up to 8 Gbps, video, mobile, and telephony services. The company also provides managed services including hosted private branch exchange, managed WiFi, technical support, and network solutions.
The business services and wholesale segment, which includes both enterprise and SMB customers, accounted for approximately 16% of Altice USA's total revenue in 2024.
Lightpath: A Strategic Growth Engine
Altice USA's fiber-based enterprise business, Lightpath, has been a key contributor to the company's growth strategy. In the fiscal year 2024, Lightpath reported revenue of $414 million, representing a 5.5% year-over-year increase, driven by footprint expansion and higher net bookings.
Lightpath's presence in the hyperscaler customer segment has been particularly notable, with nearly $110 million in contract value secured in 2024. The company's AI-related infrastructure connectivity sales pipeline stood at nearly $1 billion across 10 markets, positioning Lightpath for continued growth in this rapidly expanding market.
In 2024, Lightpath closed the acquisition of United Fiber and Data's (UFD) assets, adding a 323-route mile high-fiber count network between New York City and Ashburn, Virginia, as well as a 79-route mile metro network in New York City and New Jersey. This strategic move has strengthened Lightpath's position in the digital infrastructure industry and expanded its reach in key markets.
News and Advertising
Altice USA's News 12 networks consist of seven 24-hour local news channels in the New York metropolitan area, providing hyperlocal news, traffic, weather, sports, and community information. The company also operates the international news channel i24NEWS, which focuses on news from the Middle East.
Additionally, Altice USA's Optimum Media division provides audience-based, multiscreen advertising solutions to local, regional, and national businesses and advertising clients. The company's advertising services include the sale of advertising inventory on cable networks, on-demand, and addressable platforms across the United States.
The news and advertising segment contributed approximately 5% of Altice USA's total revenue in 2024.
Other Revenue
Altice USA's other revenue, which includes mobile equipment sales and other miscellaneous revenue streams, accounted for approximately 1% of the company's total revenue in 2024.
Looking Ahead: Guidance and Opportunities
Altice USA has outlined a comprehensive set of priorities for 2025 to drive further operational and financial improvements. These include:
- Improving broadband subscriber trends through exceptional customer value propositions and the expansion of value-added services.
- Driving operational efficiency through the leveraging of AI, digital solutions, and self-service tools to enhance the customer experience while moderating other operating expenses.
- Continuing to strengthen the company's network infrastructure, with plans to grow the total passings by over 2% in 2025, the majority of which will be fiber-based.
- Maintaining a sustainable capital structure, targeting approximately $1.3 billion in capital expenditures for 2025 while preserving financial flexibility.
For 2025, Altice USA expects to moderate its capital spend to approximately $1.3 billion, which includes maintaining its rate of footprint expansion and rolling out its multi-gig upgrade plan. The company aims to stabilize adjusted EBITDA in 2025, after the 4.4% decline in the underlying 2024 figure.
Altice USA is targeting approximately 70% gross margins by 2026, up from 67.7% in 2024. The company plans to continue growing its total passings in 2025, with the majority expected to be fiber build. It also plans to increase the availability of multi-gig speeds across its footprint.
In terms of revenue growth, Altice USA expects to drive $100 million of incremental revenue in 2025 through its new pricing approach, base management, and acquisition strategies. The company also aims to moderate its other operating expenses by 4-6% by the end of 2026 through further efficiency initiatives.
These strategic initiatives, coupled with Altice USA's focus on disciplined cost management and the continued growth of its Lightpath business, position the company to stabilize its adjusted EBITDA, enhance capital efficiency, and increase free cash flow generation in the coming years.
Risks and Challenges
While Altice USA has made significant strides in its transformation, the company is not without its challenges. The highly competitive nature of the broadband, video, and mobile services industries, as well as the potential for regulatory changes, could impact the company's ability to maintain its market share and pricing power.
Additionally, Altice USA's substantial leverage, with a net debt to last two quarters annualized adjusted EBITDA ratio of 7.3x as of December 31, 2024, could limit the company's financial flexibility and increase its vulnerability to changes in interest rates and economic conditions.
The company's reliance on programming agreements with content providers also poses a risk, as disputes over pricing and carriage terms could lead to service disruptions and customer dissatisfaction.
Conclusion
Altice USA has demonstrated its ability to navigate a dynamic and competitive landscape, leveraging its strategic network investments and operational efficiency initiatives to drive growth and enhance its competitive position. The company's focus on fiber expansion, multi-gig service rollout, and 5G integration positions it to capitalize on the increasing demand for high-speed, reliable connectivity, while its Lightpath business provides a strategic growth engine in the enterprise market.
As Altice USA continues to execute on its transformation plan, investors will be closely monitoring the company's ability to stabilize its financial performance, maintain its network superiority, and effectively manage its capital structure and leverage. With a comprehensive roadmap in place and clear guidance for the coming years, Altice USA appears poised to deliver long-term value for its shareholders in the evolving telecommunications landscape.