Yahoo Finance Altice USA Inc (ATUS) (Q1 2024) Earnings Call Transcript Highlights: Navigating Challenges and ...
Total Revenue: Declined 1.9% year over year to approximately $2.3 billion.
Residential Revenue: Declined 2.9%, driven by a lower subscriber base and an increase in video customer losses.
Business Services Revenue: Grew 0.3%, supported by growth in the Lightpath business of 3.6%.
News and Advertising Revenue: Grew 7.1% in the quarter, driven by higher political revenue.
Adjusted EBITDA: Down 2.5% to approximately $847 million.
Free Cash Flow: Positive $64 million, compared to negative $166 million in the prior year's first quarter.
Residential ARPU: Grew $0.35 or up 30 basis points year over year.
Fiber Customers: Added 53,000 new fiber customers.
Mobile Lines: Added 29,000 new mobile lines.
Mobile ARPU: Grew by $4.30 year over year.
Capital Expenditure: $336 million, decreased 42% year over year.
Debt Capitalization: Issued approximately $2 billion of senior guaranteed notes.
Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Altice USA Inc (NYSE:ATUS) reported progress in improving financial and operational performance, with a focus on quality products, networks, and services.
The company's Optimum Fiber Internet network received recognition for delivering the fastest and most reliable Internet speeds in multiple states, enhancing its market reputation.
Altice USA Inc (NYSE:ATUS) is expanding its network to new markets with strategic edge-outs, leveraging existing infrastructure to increase returns on capital expenditures.
The company has seen a significant increase in data consumption among its customers, indicating strong demand for its broadband services.
Altice USA Inc (NYSE:ATUS) introduced everyday pricing as its new rack rate, simplifying and making pricing more transparent, which has led to less ARPU erosion and stable customer churn trends.
Negative Points
Altice USA Inc (NYSE:ATUS) faces challenges from the difficult macroeconomic conditions, including low household mobility and a significant decrease in housing starts in its key markets.
The company reported a total revenue decline of 1.9% year over year, indicating ongoing pressures on its business model.
There is continued competitive pressure in the west from new fiber entrants into traditional DSL markets, moderating growth expectations.
Altice USA Inc (NYSE:ATUS) experienced a slight uptick in disconnects in the first quarter due to a new disciplined approach to base management.
The company's adjusted EBITDA was down 2.5% to approximately $847 million in Q1, reflecting challenges in achieving revenue growth and managing operational expenses.
Q & A Highlights
Q: Could you unpack the competitive backdrop across broadband a bit more and perhaps what you're seeing into the second quarter, beyond typical seasonality? A: Dennis Mathew, Chairman and CEO of Altice USA, noted that the company is facing a mix of competition across different regions, with stable churn trends, especially in the East. He highlighted the impact of high interest rates and low housing starts on customer mobility and connectivity demand. Despite increased competition, particularly from Verizon's aggressive pricing and new fixed wireless solutions, Altice USA is seeing stable win shares and is enhancing its local marketing strategies to compete more effectively.
Q: You've noted a focus on fiber migration; could you provide a percentage of fiber adds from HFC migrations versus new to Altice? Also, could you discuss EBITDA trends for the rest of the year? A: Dennis Mathew mentioned that 70% of fiber adds came from migrations, highlighting improvements in the migration process. Marc Sirota, CFO, added that while previous subscriber losses impact current results, ongoing business transformations and operational discipline are expected to sustain EBITDA growth long-term.
Q: Can you clarify your expectations for ARPU improvements and the impact of new pricing plans on ARPU stability? A: Marc Sirota explained that the focus is on overall residential ARPU, which has stabilized over the past three quarters. He noted that while video losses affect ARPU, the company is mitigating these through disciplined pricing, selling additional services like mobile, and passing programming costs to customers.
Q: Could you discuss your efforts to manage programming costs for video subscribers and the strategy for video package optionality? A: Dennis Mathew discussed efforts to negotiate better programming costs and the development of new video packages that offer more content options to customers. He highlighted the use of data to inform negotiations and the introduction of a new Android-based stream box to enhance the video viewing experience.
Q: What progress have you made in advertising, especially given the strong performance even without political contributions? A: Marc Sirota highlighted the successful integration of sales strategies between advertising and B2B sales, which has driven growth. He also mentioned investments in advanced advertising platforms that differentiate Altice USA from competitors.
Q: Can you provide an update on the pace of fiber buildouts in both the Eastern and Western markets and your strategy to compete with overbuilders? A: Dennis Mathew noted that the pace of fiber buildouts remains consistent, with ongoing competition from Verizon and Frontier. He emphasized Altice USA's focus on competing effectively through localized marketing and product offerings, aiming to enhance customer acquisition and retention despite the competitive landscape.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
