Altice USA laid out a plan to deploy fiber to 6.5 million locations, or two-thirds of its entire footprint, by the end of 2025, planning to focus heavily on areas where it competes with Verizon’s Fios service and Frontier Communications.
This year, it is targeting 1.1 million fiber passings in its Optimum footprint and 200,000 passings in its Suddenlink territory, for a total of 1.3 million new locations in 2022. It expects to add another 1 million fiber passings in its Optimum footprint in 2023 and 700,000 in 2024. For Suddenlink it will deploy to 600,000 locations in 2023, 900,000 in 2024 and 800,000 in 2025.
Altice expects to spend between $1.7 billion and $1.8 billion in capex to fund its build in 2022, up from around $1.2 billion in 2021.
The company previously said it planned to add 1 million fiber passings in 2022, primarily in areas where its footprint overlaps with Verizon’s Fios service, and another 1 million to 1.5 million in 2023. It ended 2021 with 1.2 million fiber to the home passings.
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By the end of 2025, it now expects to reach a total of “about 4 million fiber passings at Optimum, covering all the areas where we overlap with Fios and Frontier, and 2.5 million fiber passings at Suddenlink,” Altice CEO Dexter Goei said on a call with investors. Its total could end up higher than 6.5 million depending on Altice’s ability to secure government funding to bring fiber to areas it otherwise doesn’t plan to cover, he added.
“With a more differentiated broadband service we expect to drive higher gross additions and help reduce churn given the reliability of fiber network service, reducing our long-term network maintenance and technical service costs,” Goei said.
It announced six Suddenlink markets in Texas – including Abilene, Amarillo, Bryan-College Station, Lubbock, San Angelo and Tyler – as some of its first upgrade targets. Work there is set to begin in the middle of this year, and be completed in phases over the next 12 to 24 months. All told, Altice said it plans to spend more than $500 million over the next four years to rollout fiber to around 1 million homes in the state.
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Future upgrades in the Suddenlink footprint will be focused in Arizona, California, Louisiana, Missouri, North Carolina, New Mexico, Oklahoma and West Virginia.
Competitive environment
The move to accelerate its fiber rollout comes as Altice faces increased competition from the likes of Verizon, Frontier and AT&T.
Frontier and AT&T are both planning significant expansions of their fiber footprints over the coming years. Goei stated AT&T’s fiber currently only overlaps with around 400,000 of the homes Altice passes – or about 12% of its Suddenlink footprint. “That will increase obviously as AT&T increases its fiber footprint,” he added.
Both Verizon and AT&T have already launched multi-gig fiber services, with Frontier planning to do the same sometime in the current quarter. Goei said around 15% of Altice’s customer base currently takes gigabit speeds, while 50% remain on plans with download speeds of 200 Mbps or less. This leaves plenty of room for step ups, he continued, noting Altice’s fiber rollout will allow it to extend multi-gig speeds to more customers.
DOCSIS diss
Last year, Altice boosted the max speeds available to 304,000 Suddenlink HFC homes to either 400 Mbps or 1 Gbps through a combination of radio frequency and equipment upgrades. While it’s planning on doing similar HFC upgrades for another 100,000 homes in 2022, Goei said “beyond this we’ll be focused on moving straight to fiber wherever possible.”
He explained Altice did briefly consider upgrading its HFC network with DOCSIS 4.0, but came to the conclusion the costs for such a move could be even higher than those to overbuild with fiber. He added HFC is also more susceptible to latency and other customer issues than an end-to-end fiber network.
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“We continue to be driven by the herd mentality that fiber is the technology of choice for anyone investing significant amounts of capital into the ground to upgrade their networks or to deploy new networks,” Goei said. “We just don’t believe that the isolated U.S. market can continue to drive a very U.S. centric technology. Even the DOCSIS networks in the European context or around the world are all driving themselves to fiber as well.”
Q4 metrics
The fiber announcement came as Altice reported results for Q4 2021. Revenue was roughly flat year on year at $2.52 billion. Broadband revenue rose 3% to $972.9 million, but overall residential revenue fell 2% to $1.9 million. Business services and wholesale revenue rose from $362.2 million to $406 million.
Altice lost 2,000 residential broadband customers, compared to a loss of 4,000 in Q4 2020. It ended the quarter with 4.39 million broadband subscribers.