Currently trading at around $2.50 a share, a tiny fraction of its peak $37.80 share price back in early December 2020, Altice USA is, in the words of equity analyst Craig Moffett, “taking its medicine.”
After years of operational cuts and consumer price increases, the Long Island cable operator, under the direction of recently appointed CEO Dennis Mathew, has instituted fairly massive price decreases across its fiber-to-the-home and cable broadband product lines.
We're talking about as much as 36% off the base 300 megabits-per-second Optimum FTTH tier. (See chart below.)
Credit Light Reading for following up first on Moffett’s January 8 report — we slept on it, but it's definitely worth mentioning.
The price changes affect all FTTH customers who aren't on promotion, Moffett noted.
“By all accounts, a very high percentage of their accounts are on promotion,” he added.
Altice USA is also reducing prices for new cable broadband customers, although it appears existing customers can also leverage these prices by threatening to walk.
According to Moffett, the cable operator, which touts around 4.6 million broadband customers, is trying to undo the aftereffects of the “Altice Way,” the strategy of increasing EBITDA through cost cuts and price increases, which proliferated amid the aggressive expansion set forth by French-Israeli cable titan Patrick Drahi a decade ago.
“The strategy worked everywhere they tried it. For a while. And then it didn’t,’ Moffett wrote.
“For the past few years, Altice has been undoing the damage caused by overzealous cost-cutting, adding back much-needed capabilities that were lost in the initial Altice bloodletting,” he added. “What they hadn't done — until now — was undo the damage done by the overzealous price increases that followed.”
During Altice USA's Q3 earnings call late last year, Mathew outlined the coming price changes: "Specifically in 2024, we'll be introducing new lower rate card pricing, a more transparent approach to promo roll-off and a speed gifting program that will bring faster speeds to customers. We'll begin by broadly implementing this new pricing strategy with our next-generation fiber rate card.
"New rate cards on fiber will go into effect in the first half of 2024 and will reduce rates for new and existing customers," he added. "This does not have a notable impact on revenue as a very small portion of our fiber customers are close to paying full rate. New rate cards on HFC will also be available in 2024 to new customers, and legacy HFC customers will move to new rate cards over time through speed tier adjustments to match existing customer prices, preserving revenue."