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Altice USA CEO Dennis Mathew brushed past rumors swirling around a potential acquisition by cable rival Charter
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Mathew instead highlighted Altice's plans to get back to growth in its business as well as its network upgrade plans
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With competition levels higher than ever, he said Altice will need to be more 'proactive'
Altice USA CEO Dennis Mathew painted a bright picture of the company's recent results and future prospects during an investor conference this week, but couldn't escape acknowledging the elephant in the room – swirling rumors surrounding a potential Altice acquisition.
Mathew’s response was brief. “I want to say three things about that,” he said.
“One is we're a controlled company. Two is, I don't speculate on what other companies may or may not be doing. And three is that my number one focus is to drive maximum positive impact for our teammates, our customers, communities that we serve and our shareholders by accelerating this transformation.”
Surprisingly, this marked the only mention of speculation around “Chaltice,” a rumored merger bid that began floating around after sources told Bloomberg that Charter is working with financial advisors to determine if it makes sense to buy Altice.
Instead, the majority of the conversation centered on Altice's achievements in 2023 and Mathew’s roadmap for the coming year. For example, the company raised its fiber passings goal for 2024 after touting its “best quarter” for fiber net additions last month, despite revenue being down.
Mathew noted certain improvements for the company last year, like a more than 20-point jump in its Net Promoter Score (NPS). Altice USA managed to stabilize opex and capex last year, as well as moderate erosion in average revenue per user (ARPU), he said. And the company successfully delivered free cash flow, which he underscored was a result of its continuing focus on “financial discipline.”
Altice looks for fiber, DOCSIS balance
In 2024, Mathew said Altice will double down on enhancing customer experience, implement new pricing strategies and expand its mobile services.
Additionally, Mathew reiterated the company's commitment to growing its fiber network after he was asked a key question: “Why does it make sense for Altice, especially given the balance sheet focus on free cash flow, to build a fiber network? To go fiber to the home when the rest of the major cable operators in the US are generally leveraging DOCSIS and other sort of evolutionary technology solutions?”
Mathew backed the company’s decision to invest in fiber, citing the need to compete effectively with established fiber providers in its markets, like Verizon. According to him, Altice is 70% over built by Verizon.
“I do find that it's helpful to have the best product when you're competing,” he said, touting fiber’s symmetrical and multi-gig speeds, as well as satisfaction rates, churn benefits and ARPU gains brought by the technology.
That said, Altice will need to invest in DOCSIS, too. “It really does have to be a balance, because it's not one size fits all. We need to have the right product, the right service, the right go-to market strategy, based on the competitive landscape,” said Mathew.
Last year, the company upgraded 300,000 homes in its western U.S. footprint to DOCSIS 3.1 and it will keep going, with another 200,000 upgrades planned.
More competition than ever
In recent results, Altice USA’s fiber business fared better than its broadband base. The company posted 27,000 broadband net losses in Q4, compared to a loss of 9,000 in the year-ago period. The decline was attributed to “additional competitive pressure” during the holiday season as well as a continued low move environment.
Mathew admitted that Altice is kind of playing catch-up in building a base strategy, amid the highest level of competition he’s ever seen among operators, and widespread cable losses due to fixed wireless growth (This past quarter, Altice, Comcast and Charter all reported broadband net losses). He pointed out that in the eastern U.S., the company is up against Verizon's solid fiber infrastructure, while in the west, it's a mix of smaller fiber builders and AT&T. On top of that, fixed wireless keeps popping up, adding to the hustle.
To tackle this, Mathew stressed the need for a strong local presence and a sharp-eyed leadership team. The company has been onboarding over 100 new executives to drive its transformation journey. He noted Altice has built a leadership structure to keep tabs on what the competition's up to - who's building what, what promos they're running, you name it.
The goal? Arm Altice's teams with the right intel to play the game smarter, not just react to what's thrown at them.
Despite the tough competition, Mathew seems pretty confident in Altice's ability to survive, touting their network and product lineup as solid assets. But he's also real about the need to step up their game - more discipline, more “proactive” moves. No more sitting back and reacting.
It's time for Altice to “take the steering wheel and drive forward,” he said, shaping its own destiny in the market.
Update 3/5/2024 9 am ET: This story has been updated to correct the spelling of CEO Dennis Mathew's name.