- Share this article on Facebook
- Share this article on Twitter
- Share this article on Email
- Show additional share options
- Share this article on Print
- Share this article on Comment
- Share this article on Whatsapp
- Share this article on Linkedin
- Share this article on Reddit
- Share this article on Pinit
- Share this article on Tumblr
U.S. cable giant Altice USA is expecting to lose broadband subscribers to the tune of 15,000 to 20,000 in the current third quarter, CEO Dexter Goei told an investor conference Thursday.
Goei also signaled that the company, which had its initial public offering in 2017, could revisit down the line whether remaining a publicly traded company makes sense or Altice USA should go private. After a comment on the firm facing decisions, he was asked if it makes sense to stay public or if management could take out the public float. “Yes, that was the code,” Goei replied. “We got decisions whether we want to relever the balance sheet at some point in time before not getting rewarded for what we are doing … but I don’t think that is a decision for us to make today.”
Speaking during the virtual Goldman Sachs Communacopia Conference, Goei noted lower gross subscriber additions in broadband in the current quarter amid an “underwhelming” back-to-school period following a slight gain in the second quarter and 11,500 adds in the first. But the company is “hopeful” for more “normalized” trends and broadband customer growth in the fourth quarter, which would leave the company’s broadband user base “flattish to slightly up” for all of 2021, after averaging a gain of 72,000 in 2018 and 2019 and adding more than 140,000 in 2020, Goei said, calling that “disappointing.”
Many cable operators have expanded their broadband user bases amid growing internet usage, which has also been boosted by work-from-home orders during the COVID-19 pandemic. But Comcast recently also signaled weaker-than-previously-expected broadband trends in the third quarter.
Earlier this month, Altice USA, the fourth-largest U.S. cable operator, said its COO Hakim Boubazine had resigned, with Goei assuming his duties. The CEO said Thursday that the change would help speed up decision-making, saying it “really helps to flatten the organization” and allow issues to rise to his attention “quickly.”
“This resignation comes at a time when Altice USA has badly underperformed U.S. cable leaders,” Bernstein analyst Peter Supino noted in a report at the time. “Prior to this news, Altice USA’s stock had fallen about 24 percent year-to-date, and [it] fell about 2 percent on the news.”
Supino added: “Operationally, over the last three quarters, Altice added just 8,000 organic broadband net adds. Operational trouble seems to run deeper — consensus earnings before interest, taxes, depreciation and amortization forecasts for Altice USA began declining in 2018, and in the second half of 2019 Altice struggled with key operational initiatives.”
But the analyst maintained his “outperform” rating on the cable companies’ stock. “While our most important second-half 2021 estimates remain below consensus, we continue to recommend Altice USA because we believe the business is structurally sound, under-valued and strategically appealing to several larger, acquisitive companies,” Supino concluded.
Goei said Boubazine did a “fantastic job,” but acknowledged: “What’s clear is that operating trends have been a little bit underperforming, underwhelming.”
Altice USA, which a few years ago acquired Cablevision and Suddenlink, is the biggest U.S. cable operator behind Comcast, Charter Communications and Cox Communications.
Last year, it tried to take over Canadian cable company Cogeco’s U.S. unit, Atlantic Broadband, via an unsolicited bid. It would have sold the company’s Canadian assets to Rogers Communications. But the controlling shareholder of Cogeco, the Audet family of Montreal, rejected the original bid and a sweetened $3.96 billion (CAN$5.2 billion) offer.
Altice USA shares were down 4.3 percent as of 11:25 a.m. ET at $24.18.
Sign up for THR news straight to your inbox every day