Much ado has been made about the cost benefits that can come from operators shutting down their old copper and cable networks as they overbuild with fiber. But while Altice USA has joined the ranks of those pursuing extensive fiber rollouts, CFO Michael Grau said it’s not planning to ditch its HFC assets anytime soon.
Speaking during a J.P. Morgan investor conference, Grau explained there are several reasons why its cable network will be sticking around. The first is purely logistical. While the operator recently unveiled plans to blanket around two-thirds of its footprint with fiber by the end of 2025, Grau said it will take some time to migrate its customer base off HFC and onto fiber.
To date, Grau noted “almost all the fiber customers we’ve gotten have been as a function of gross adds in the fiber footprint” rather than from customer migrations. However, he said the operator plans to launch a “much more proactive” migration effort within the next three to four weeks.
Altice USA ended Q1 with 81,000 fiber subscribers. CEO Dexter Goei has said it is aiming to reach 200,000 fiber subscribers by the end of 2022.
According to Grau, Altice’s extensive Wi-Fi network is another reason for keeping the HFC network afloat. He pointed to the Wi-Fi offering, which runs on its cable assets, as a “powerful” service offering and said “it would be hard to take that away” from consumers.
In terms of how the financials of running two networks will work out, Grau explained “the real savings to be realized from fiber are not a function of shutting down the HFC network. The real savings on the opex side are around our customer interactions.” He reiterated previous statements from Goei that issue instance rates for customers with fiber service are significantly lower than for customers with HFC internet – to the tune of 30-40%.
He added Altice USA still expects to spend around $400 million per year on CPE even with its new fiber network. It currently spends around $500 million on plant maintenance (or $600 million if you include Lightpath), but Grau thinks it can cut that figure in half if it doesn’t pursue capacity upgrades on the HFC network.
That said, “I don’t see a path where we shut down the HFC network necessarily,” he concluded.