Altice USA is getting closer to restarting fiber network construction as it looks to add new suppliers to the mix, amid an internal investigation of the company’s procurement activities stemming to a corruption probe targeting Altice Europe’s operations in Portugal.
That’s according to Altice USA CEO Dennis Mathew, who was asked for an update on the situation Wednesday at the Goldman Sachs Communacopia + Technology conference.
“I think next year we’ll be back in that 500,000 to 1 million range, then continue to drive that forward in 2025,” Mathew said of the company’s fiber build activities. Altice USA built about 287,000 fiber-to-the-premises (FTTP) passings in Q2 2023, largely focused on the company’s footprint in New York, Connecticut and New Jersey, raising its total to 2.66 million.
The operator is starting to onboard some new suppliers that will help put Altice USA on a path to restart construction, said Mathew, a former Comcast exec who took the helm of Altice USA last year.
“We have new partners we are actively onboarding. We’re confident that we can resume that fiber construction in the near term,” he said.
Spurred by the probe underway in Europe, Altice USA made a string of moves last month that included an internal investigation into its procurement activities and the suspension of some capital spending. Altice USA also hired former Comcast exec Jennifer Yohe as its new chief procurement officer, as the exec formerly in that role, Yossi Benchetrit, was put on leave and eventually left the company.
Mathew stressed that having fiber in Altice USA’s arsenal, particularly in the east where it grapples with Verizon, is “mission critical” to the company. He reiterated that the company tends to see an incremental ARPU (average revenue per user) increase in the range of $10 to $20 in FTTP-based services compared to those running on hybrid fiber/coax (HFC) networks.
Altice USA is also upgrading to fiber in some parts of its more rural, former Suddenlink areas, but is relying a bit more heavily on DOCSIS 3.1 upgrades there.
“We have other tools in our toolkit to be able to win,” Mathew said.
Broadband losses narrowing
Turning to broadband subscriber trends, Mathew said he expects Altice USA to narrow customer losses in the third quarter of the year. Altice USA, which lost 43,000 residential broadband subs in Q3 2022, saw improvements in broadband customer acquisition activity in July and August, he said.
Meanwhile, the company has been making corporate and regional executive changes as part of a companywide transformation initiative. That also includes new heads for areas such as contact centers, consumer sales, retail, digital, door-to-door sales and business-to-business sales.
“We do see the path forward,” Mathew said. “We’ll stem the losses and our goal is to be back to broadband growth again.”
Altice USA also expects to lean more heavily into convergence, led in part by its relatively new Optimum Complete plan that bundles Altice USA’s home broadband and mobile products.
Mathew said company research found that 25% of consumers are looking for one provider to supply both in-home and out-of-home connectivity.
He also noted that Altice USA has been able to convert about 60% of mobile customers that are starting to roll off a free line promotion into paying customers. The company, he said, is doing more to communicate with those customers about other packages, including the Optimum Complete bundle, as they near the roll-off.
“Honestly, this was our first tip-toe into active base management,” he said. “Going forward, we’re going to be more disciplined about pricing and packaging for mobile customers.”
Mathew said Optimum Mobile, a service that relies on an MVNO deal with T-Mobile, is averaging 1.2 lines per customer. He expects to be able to drive that average to two-plus lines.
No easy answers to the pay-TV puzzle
Mathew was also asked to weigh in on the carriage dispute between Charter Communications and The Walt Disney Company. He said he recognizes that viewing habits have changed alongside a “really odd dynamic” where demand for pay-TV is decreasing as prices are increasing.
There are no quick and easy answers to the issue, but Mathew said operators and programmers need to do a better job working together to supply linear TV programming and support consumer desires for direct-to-consumer (DTC) streaming services.
“The reality is that video is the number one application on our network,” he said. “People have said they want simplicity, so we would love the opportunity to be able to offer both linear and direct-to-consumer solutions in packages and have those packages better reflect the content that consumers want to consume.”
— Jeff Baumgartner, Senior Editor, Light Reading