Altice USA, Inc. (ATUS) is a leading telecommunications company in the United States, providing a comprehensive suite of broadband, video, and telephony services to residential and business customers. The company has a strong presence in the New York metropolitan area and various markets in the south-central United States, with a fiber-rich hybrid-fiber coaxial (HFC) broadband network and a fiber-to-the-home (FTTH) network covering approximately 9.7 million total passings as of March 31, 2024.

Financials

In the fiscal year 2023, Altice USA reported annual revenue of $9,237,064,000 and net income of $53,198,000. The company's annual operating cash flow stood at $1,826,398,000, while its annual free cash flow reached $121,587,000. These financial metrics demonstrate Altice USA's scale and the strength of its underlying business.

During the first quarter of 2024, Altice USA reported revenue of $2,250,935,000, a 1.9% decrease compared to the same period in the previous year. This decline was primarily driven by a lower subscriber base and an increase in video customer losses. However, the company's Residential ARPU (average revenue per user) grew by 0.35% year-over-year, marking the second consecutive quarter of ARPU growth.

Segment Performance

The company's Broadband revenue for the first quarter of 2024 was $916,994,000, a 4% decrease compared to the same period in 2023. This decline was due to a decrease in broadband customers and lower average recurring broadband revenue per broadband customer. Video revenue for the quarter was $755,594,000, a 2% decrease year-over-year, primarily due to a decline in video customers, partially offset by higher average recurring video revenue per video customer.

Telephony revenue for the first quarter of 2024 was $70,965,000, a 9% decrease compared to the same period in 2023, driven by a decline in telephony customers, partially offset by higher average recurring revenue per telephony customer. Mobile service revenue, on the other hand, grew by 60% year-over-year to $24,893,000, driven by an increase in mobile customers and a decline in customers receiving free service.

Business services and wholesale revenue for the first quarter of 2024 was $364,861,000, a 0.3% increase compared to the same period in 2023. This increase was primarily due to higher revenue from Altice's Lightpath business, which saw increases in Ethernet and indefeasible right of use contract fee revenue, partially offset by a decrease in wholesale revenue.

News and advertising revenue for the first quarter of 2024 was $105,725,000, a 7.1% increase year-over-year, primarily due to an increase in linear and digital advertising revenue from political advertising.

Recent Developments

Altice USA's focus on delivering the highest-quality network experiences to its customers has been a key driver of its performance. The company's Optimum fiber internet network was recently recognized by Ookla Speedtest for delivering the fastest and most reliable internet speeds in New York and New Jersey, as well as the lowest latency across New York, New Jersey, and Connecticut. Additionally, Optimum received the top ISP award by CNET in 8 major cities across Connecticut, New Jersey, North Carolina, Texas, and Arizona.

The company's continued investment in its FTTH network has also been a priority, with Altice adding 45,000 fiber passings in the first quarter of 2024, bringing its total fiber passings to 2.8 million. Altice's focus on driving more penetration to its fiber network has been successful, with the company ending the first quarter of 2024 with over 14% penetration of its fiber network, up from under 9% in the first quarter of the previous year.

Altice USA's mobile business has also been a bright spot, with the company adding 29,000 new mobile lines in the first quarter of 2024, a 3.8x acceleration in pace compared to the same period in the previous year. The company's Optimum Complete bundle, which combines broadband and mobile services, has been a key driver of this growth, and Altice plans to further expand its mobile portfolio by adding tablets, device protection, smartwatches, and wearables later this year.

Risks and Challenges

Despite the challenges posed by the current macroeconomic environment, including continued financial stresses on consumers and competitive pressures in the West from new fiber entrants, Altice USA remains focused on its transformation journey. The company's efforts to improve its operational efficiency, enhance its customer experience, and expand its product portfolio have yielded positive results, as evidenced by the stabilization of its Residential ARPU and improvements in its NPS (Net Promoter Score) metrics.

Outlook

Looking ahead, Altice USA expects its full-year 2024 capital expenditure to be in the range of $1.6 billion to $1.7 billion, as the company continues to make strategic investments to enhance its network and product offerings. The company's management team remains confident in its ability to navigate the competitive landscape and drive sustainable long-term growth, leveraging its disciplined approach, focus on profitability, and commitment to delivering high-quality products and services to its customers.

Liquidity

Altice USA's debt capitalization is also well-managed, with the company recently issuing $2 billion in senior guaranteed notes due in 2029 to pay down near-term maturities. As of the end of the first quarter of 2024, Altice USA's weighted average cost of debt was 6.5%, and its weighted average life was 4.8 years, with 86% of its total debt in fixed-rate instruments.

Conclusion

In conclusion, Altice USA is navigating the competitive headwinds in the telecommunications industry with a disciplined approach, focused on delivering high-quality network experiences, enhancing its customer relationships, and expanding its product portfolio. The company's financial performance, network investments, and debt management position it well to continue its transformation journey and drive sustainable long-term growth.