reports
- Jonathan Chaplin
Altice Model Update
This note focuses mostly on model changes. Please see separate notes reviewing results and on thoughts following the earnings call. The Company needs to stabilize EBITDA and reduce debt to reclaim equity value. They are making (slow) progress on the first. The second is possible via discounted exchanges, but it won’t be easy. We remain on the sidelines.
- Jonathan Chaplin
ATUS: quick thoughts following the call
In this brief note we cover 1) the prospect for discounted debt exchanges; 2) our evolving thoughts on ABS; 3) the path to ARPU and EBITDA stability; 4) Altice’s decision to overbuild Comcast in NJ; and 5) the normal stuff on broadband market growth, ACP, Altice’s adds, and the investment case.
- Jonathan Chaplin
- Jonathan Chaplin
- Jonathan Chaplin
Fiber to the Future – Broadband Trends; Infrastructure Wars; New ILEC ...
We just wrapped up the second day of the BCG and NSR Fiber to the Future Conference. The second day featured discussions with over 30 companies including Altice USA, AT&T, BT Group, Charter, Dycom, Deutsche Telekom, Frontier, Goldman Sachs, Liberty Global, Lumen, Recon Analytics, Shentel, TDS Telecom, Tillman Global, Tucows, and Verizon.
- Jonathan Chaplin
CHTR & ATUS Quick take: thoughts on merger rumor
Bloomberg is reporting that Charter is working with advisors to explore an acquisition of Altice. We are taking the story seriously, though we believe that Altice’s leverage and operational challenges make a deal difficult. We think there are very limited circumstances under which a deal would be feasible. Our quick thoughts in this brief note.
- Jonathan Chaplin
ATUS 4Q23 Quick Take and Model Update
Subscriber trends were nearly in-line but broadband adds remain pressured in 1Q24. EBITDA beat thanks to higher video ARPU. We think the company is doing the right thing by pulling back on fiber build and focusing on driving penetration in existing markets. The debt issuance last month pushes maturities to 2027 and gives management three years to fix the business. For now, we don’t see a big change in the business by 2027. We remain on the sidelines.
- Jonathan Chaplin
ACP Part II: estimating the impact on Broadband companies
We previously published a report exploring the impact of the loss of ACP subsidies on Charter. In this report, we have improved and expanded our framework in two ways: first, we expanded the analysis to include more broadband providers, including Comcast, Altice, Cox, Lumen, Frontier, and others; second, we found new publicly available data that informed our estimate of ACP recipients by operator.
- Jonathan Chaplin
ATUS Quick Hit: Price Changes Are a Step in the Right Direction
Press reports indicate that Altice will increase the “network enhancement fee” levied on all broadband subscribers. At the same time, they are cutting rack rates for all tiers of the broadband product. The fee increase will provide a small boost to ARPU in 2024. The reduction in rack rate pricing is big; however, we don’t think they will materially impact ARPU.
- Jonathan Chaplin
Broadband Trends: Altice has a long way to go
We published our big report on broadband trends on Sunday. Today, we are publishing one new slide that focuses more closely on Altice's challenge. In the big report, we showed that Altice's NPS lagged peers and competitors by a wide margin. In this slide, we show that their NPS on their fiber product is fine; the Cable product has issues.
- Jonathan Chaplin
ATUS 3Q23 Quick Take and Model Update
Subscriber trends were in-line. EBITDA beat thanks to higher video ARPU. We have a much clearer view of Altice’s access to ABS and deleveraging prospects following recent work. We think the Company needs to cut capex, pausing fiber deployment until EBITDA is growing sustainably.
- Jonathan Chaplin
- Jonathan Chaplin
Altice USA: Updated thoughts on ABS refinancing options
We recently published a report on Altice’s path to lower leverage. We followed up with a conference call that took a holistic view of the Altice complex including Altice International and Altice France. In this follow-up report, we take a more detailed look at the prospect of an ABS deal, following conversations with credit investors and agencies. We conclude that an ABS won’t be easy, but it will bring important benefits if it happens.
- Blair Levin
NSR Policy: Biden Reported to Seek New Round of ACP Funding
We understand that President Biden will soon send the Congress a National Security and a domestic spending plan, with the domestic plan including a request for more funds for the Affordable Connectivity Program (ACP). If Congress adopts the ACP recommendation, it would be a positive for all ISPs, as the ACP currently provides a subsidy to over 20 million households. If not adopted, the ACP is likely to run out of money sometime in the spring of 2024. As we have written before, the end of the ...
- Blair Levin
NSR policy: FCC Chair Puts Thumb on Scale for Broadcasters in Retransm...
Yesterday, FCC Chair Rosenworcel circulated two items for a Commission vote that would help broadcasters in retransmissions disputes by forcing the cable, satellite, and telco multi-channel video program distributors (MVPDs) to reimburse consumers for blackout days during which the consumers did not get the full package that they had signed up for.
TMUS T-MOBILE US INC.
VZ VERIZON COMMUNICATIONS INC.
VIAB VIACOM INC. CLASS B
T AT&T INC.
SBGI SINCLAIR BROADCAST GROUP INC. CLASS A
NXST NEXSTAR MEDIA GROUP INC. CLASS A
DISH DISH NETWORK CORPORATION CLASS A
DIS WALT DISNEY COMPANY
CHTR CHARTER COMMUNICATIONS INC. CLASS A
ATUS ALTICE USA INC. CLASS A
FTRCQ FRONTIER COMMUNICATIONS CORPORATION CLASS B
- Jonathan Chaplin
Thesis changing events for US telecom and cable – Global Weekly Review
In this iteration of the global review, we will touch on important themes we have covered in reports over the past couple of weeks. The reports had important, thesis-changing implications for Charter, Comcast, T-Mobile, Dish, Altice, and the towers.
- Jonathan Chaplin
Altice USA: The Path to Lower Leverage
We explore Altice’s ability to manage leverage under four scenarios. We show that the Company can lower leverage by close to one turn over the next five years, if they refinance in the high yield market. They can do slightly better than that if they refinance in the ABS market. If they halt fiber deployment, they could lower leverage by close to one turn and a half. Asset sales may help with liquidity, but they are not likely to help much with leverage.
- Jonathan Chaplin
ATUS 2Q23 Quick Take and Model Update
Subs missed; but EBITDA beat. In this report we cover results, changes to estimates, the investigation and the slowing of the fiber build, our concerns around pricing, and the potential for the ABS market to transform Altice’s prospects. We are more constructive on the equity and the unsecured bonds than a quarter ago (though we haven't upgraded the equity yet).
- Jonathan Chaplin
ATUS 1Q23 Quick Take and Model Update
What’s new: EBITDA was better than feared; however, broadband subscriber and ARPU trends were weak. Broadband ARPU was particularly weak. Management guided to an improvement in EBITDA from 1Q23 levels through the rest of the year, driven by improved trends in business and advertising, coupled with cost cuts. EBITDA estimates may not change much. We remain neutral on the equity and would prefer to invest through the credit.
- Jonathan Chaplin
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