Q2 2021 Altice USA Inc Earnings Call
Partnership I'm, sorry in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question during that session you will need to press star 1 on your telephone keypad, if required and for the assistance. Please press star zero.
<unk>.
So like behind the conference over to your Speaker today, Mr. Nick Brown the floor is yours.
Thank you Hello, everyone and thanks for joining.
And then I'll hand, you over to Altice USA Dexter <unk>.
Our CFO might grow who will take you through the presentation and then we'll have time at the end for Q&A.
I would not today's presentation may contain forward looking statements. Please read the disclaimer on page 2.
Please go ahead.
Hello, everyone before we jump into a summary of our second quarter results. Once again want to express my gratitude for their continued dedication.
<unk>.
I thought was from pool and.
And it wouldn't have been able to navigate the pandemic as well as enhanced.
Starting on slide 3 we saw an acceleration in revenue growth from second quarter to 1.7% year over year with a particularly strong rebound in on moving our advertising business.
We continue to deliver high broadband revenue growth.
About 8% year over year, although we have seen elevated move activity recently.
Moving killing from home locations as well as the Photronics, Inc of several pandemic related regulatory program and broken.
Despite these headwinds we reported flat organic broadband customer growth in Q2.
Other plus 30, thousands, including a recent more broadband acquisition.
We will remain constant and faster customer growth going forward from our accelerated pace of flip from expansion.
Submarine cable network upgrades and optimum fiber upgrades.
We also continue to invest in innovative new products, most notably our opportunities.
From an extreme device, which I'll come back from shortly.
Turning back to financials, adjusted EBITDA was flat year over year, even with some tougher comparisons, which Mike will touch on later.
We delivered another strong quarter of free cash flow of 436 million and.
And just under $1 billion for the first half of the.
Alone.
This is reported $726 million a share repurchase year to date or just under half of our full year targets.
All of which gives us the confidence to reiterate our 2021 financial outlook.
Looking at Q2 revenue growth in more detail on slide 4 we continued acceleration from the FERC.
First quarter growing at 1.7%.
Blood Center revenue was flat year over year, the subsequent growth flow compared to the peak we saw at this time last year.
Business services growth accelerate from 1.8% supported by more reopening activity.
Finally, moving advertising grew very strongly.
Only up 36, 4% with a much easier year over year comparison.
Turning to slide 5 focusing our residential business.
We reported organic net loss of 12000 residential customer relationships, excluding more broadband acquisition.
Separately added 35000.
Moving customers since the <unk> acquisition within the quarter.
To provide some context second quarter are usually seasonally weaker from <unk>.
Earlier, we did see a noticeable pickup in new churn as markets are reopening more widely.
This includes customers, leaving our suburban footprint around New York and going back to New York.
With the number outside of other <unk> footprint.
For illustration that new churn was more in line with the second quarter of 2019, we estimate we actually would have been flat in terms of customer relationships and would have reported 14000 broadband net additions rather than moving posted EBITDA.
Additionally, in the quarter, we disconnected about 7000 customers from on payments that were previously protected by pandemic related regulatory program.
The FCC pledge or New Jersey executive order.
That was affected by prior Hurricanes in Louisiana.
In other words without the impact of elevated move churn and pandemic program.
Graham from storms.
Would have been approximately 1000 data net adds and plus 7000 customer relationships for the quarter.
We call that New York was the latest state to prevent us from disconnecting customers with legislation enacted in May this year.
While this quarter was lifted at the end of June.
E Commerce channel with the end of the declared COVID-19 state of emergency and has led to some subsequent revenue disruption, which will carryover into the third quarter.
We've now been able to resume our normal disconnect policies across the whole company and so our trends from normalized by the fourth quarter.
However, as elevated move churn percentage.
As we have continued to see it recently.
It may be difficult from that historical 2018 in 2019 organic broadband customer growth for this year.
Adjusted backdrop, our strategy remains the same which is to achieve faster broadband customer and revenue growth by accelerating the pace of Newbuild.
And network upgrades, including our fiber rollout.
Sales.
We are expanding our footprint and we will be delivering services, which are considerably better than those offered by our competition, which sets up really well for the next few years.
On slide 6 we would like to provide an update on some data usage strength.
Average monthly data usage per customer was 445.
Rollout gigabit per month in Q2 with broadband only customers, who reported a 600 gig per month.
It will still be remains the biggest driver accounting for about 2 thirds of data usage and this is also helping drive demand for higher broadband speeds.
Remember over 50% of our customer base there are only 200 megabits.
My second or lower.
We still have a lot of room for growth there.
42% of our growth editions are taking 1 gig broadband speeds in areas, where it is available moving very optimistic about the 1 day and multi gig opportunities ahead of us.
Slide 7 shows upon the success, we're having right now.
With upsell customers for higher broadband speeds here.
Our 1 day customer penetration increased to 11, 3% from Q2 up from just 3.7% a year ago.
Our average download speeds have nearly doubled in the past 3 years of 316 megabit.
And as you can see that this is accelerating.
<unk> are increasingly taking the 1 gig service.
Turning to slide 8 we wanted to update you on our long term network expansion and fiber strategy.
On the left you can see we are on track for at least 150000, new homes built mostly edging out around the southern footprint with more broadband inorganically.
Customers, adding another 90000 homes in North Carolina.
The acceleration of our prior run rate of new debt.
We are still achieving about 40% after the first year of extending our alpine network into new areas. So we're getting a very good return on this investment.
Separately, we are pleased to upgrade existing home from the 70.
<unk> will bring in the areas where customers previously onward feed the maximum of 150 Megabits per second taking.
<unk> taken steps to either 400, megabits or 1 gig.
On a run to continue in Q2 reached about $1.1 million fiber homes ready for service. We are still on track the top half a million homes this year with the material.
So pick up right now in the summer months.
Our penetration of fiber copies is now up to 4.3% compared to just 1% in Q2.2020.
About 2 thirds of our fiber growth adds are taking more symmetric 1 gig product, which is our best service available today.
But we are focused on making multi.
Materials speeds available as soon as possible and should start marketing fiber more actively in the next few quarters.
Moving to slide 9 last week, we announced our latest product operating screen and suddenly screen.
This is a new <unk> streaming device powered by an Android TV operating system.
Customers.
Similar to our access to a wide range of content, including over 50 streaming television channel and other most popular streaming app preinstalled with thousands more available in the Google play store.
From the banks are available for free for broadband only customers, who take our 1 gig service.
The highest broadband speed available net service area and is available to.
Deep broadband only customers for just $5 per month.
We believe this offer a really good alternative for our broadband customers that don't want to take a legacy cable TV bundle.
Last week, we also announced the rebranding of Altice mobile is optimal mobile which is the first step in our plan to align all of our connectivity.
Zone, including some intervention under 1 National Hoffman brand.
Recall, we recently migrated all of our active mobile customers to T Mobile's network and as we're seeing a much better customer service. This is a great time to rebrand and align the business more closely with our fixed broadband business.
After a mobile had a proxy.
The other 180000 mobile lines as of the end of June which is 3.8% penetration of altice USA sales into customer base with.
With revenue in Q2 up 4%.
On slide 10 on business services I'm pleased to say revenue trends continued to recover across our SMB and lightpath businesses.
As customer growth has been much better in recent months.
And from Q2 saw our best ever SMB customer net adds from 4 years.
Business reopening activity has been accelerating a vaccination rates increased and operational restrictions relax rests.
Restaurants theaters health from travel and tourism.
Proxy examples of businesses and industries that start to reopen more widely from Q2.
The swing back around in New York attractive area is more dramatic because the COVID-19 prices generally hit harder.
We still see a higher than normal retail and commercial office space vacancy rates, which means many businesses are still missing from the situation is improving.
As K 12, and college could safely go back to school. We believe this will be the next big step up from the economy and our DVD business.
During the quarter lifestyle also announced extensive network into Boston through 3 acquisitions and to clean through new organic fiber build.
The strength in flight path presence across.
Tier 1 markets in the northeast and we're making investments in growing our sales team to drive penetration.
Focusing on our moving advertising business on slide 11, we saw very strong growth this quarter up 36% as remember Q2 last year saw the biggest negative impact from the pandemic on our advertising business.
Local regional and National advertising markets are all recovering, which we expect to continue and.
And we saw additional growth from the recent New York, narrow and new Jersey to the soil election races.
We still expect revenue for the whole of 2021 will be flattish on a year over year basis fell as we will have a tougher comp.
And half due to the political comp.
And now I'll hand, you over the months to go over the financials in more detail.
Thank you Dexter and good afternoon, everyone. Thank you for joining us today.
Picking up on slide 12, you can see our adjusted EBITDA margin was 43, 9% in the second.
Quarter, which is in line with 2019 levels with total EBITDA growth flat year over year.
Excluding mobile EBITDA losses are Q2, EBITDA margin was 44, 8%.
And looking at year over year variances recall that we had from temporary savings in the second quarter of last year about $30 million in.
Total, including store closures and lower sales and marketing expenses.
Our EBITDA less capex or operating free cash flow margin of 31, 1%.
So in line with 2019 levels as we ramp back up on the pace of our fiber rollout and new builds.
You can see this again on slide 13.
Capital intensity was 12, 8% this quarter almost exactly in line with 2019 levels.
Without growth investments in fiber, our new home builds capital intensity would have been under 10%.
As we flagged previously our Capex spend is increasing back up to historical levels now as we're back on.
On track with our network expansion and upgrades without as many delays on the fiber permitting side in particular.
Extra outlined we remain excited about the long term potential of our network to keep delivering superior connectivity solutions to our customers at a reasonable cost.
Having sustainable volume based organic growth.
Slide 14 highlights another strong quarter of free cash flow generation at $406 million.
Which means we've achieved free cash flow of $943 million year to date.
I would highlight the cash taxes have started to step up now with a net outflow of $97 million in the second quarter.
We still.
Still expect total cash taxes of about $300 million to $350 million for the year.
We also saw cash outflow for the Morris broadband and Lightpath transactions closing in the quarter.
Cash flows from financing activities, including included an outflow of $222 million.
Related to our share repurchase program.
Moving to slide 15, we show our consolidated debt maturity profile.
Following our recent refinancing activities the weighted average life of our debt was extended to 6.6 years and our available liquidity was boosted to over $2.3 billion, even after our recent acquisitions.
Our weighted average cost of debt.
It remains a 4.7%.
Specifically recall that in May we issued $1.5 billion.
Of new 10, and a half year, 4.5% senior guaranteed notes and $500 million of new 10, 5 year, 5% senior notes to refinance the existing 5.5% senior guaranteed notes.
2026, and repay a portion of the drawn revolving credit facility.
We have no annual bond maturities greater than 1 billion before 2025, all of which could be covered by either free cash flow generation capacity from our revolver.
We will continue to proactively and opportunistically.
<unk> manage our liabilities in the same way as we've done in the past and still see plenty of additional refinancing opportunities.
For example, we have a non callable 6 and 3 quarters percent bond maturing in November this year. So that's probably the next thing for us to address in 2021.
Lastly on slide.
2016, we provide a reminder of our financial outlook for 2021, which we are reiterating today.
We expect to grow both revenue and adjusted EBITDA for the full year, reducing leverage to under 5.3 times.
We are at a peak and leverage right now given our recent acquisitions and as our EBITDA is normally weighted more to the second half.
Half of the year.
Our medium term leverage target remains unchanged at between $4.5 5 times.
We expect cash capex in the range of $1.3 to $1.4 billion as we ramp up our fiber rollout in new builds driving higher capital expenditures in the second half of it either.
And finally, we are still targeting $1.
Cash and share repurchases. This year, having completed just under half of this amount at $726 million year to date.
Lastly, before I finish I also just wanted to take a moment to thank our team at Altice USA for all their dedication and commitment and emphasize how focused we are on executing on all of our growth initiatives.
And with.
5 we will now take any questions.
Yeah.
As a reminder to ask a question you will need to pass star 1 on your telephone keypad.
That is 1 our net.
<unk> keypad.
You have your first question coming from the line I'll turn with Cusick.
With that we'd be Morgan your line is now open.
Hey, guys. Thanks.
First I guess from Mike can you help us think about about EBITDA in the back half you talked about a tough opex comp in the core.
Quarter.
Growing from the second quarter level, but <unk> seems difficult.
Difficult I'm curious why that happened.
And then second Dexter as you think about the.
The consumer broadband growth expectation changed what's changed specifically that you know maybe it's tougher to hit that 18.19 level. Thank you.
So total.
About.
The second half EBITDA, though.
Based on our own internal projections different programs, we have in place as well as you know some other comps at least on the Opex side get a little easier as some of those temporary cost savings reverted back into our cost base from the second half, we're pretty confident we can grow EBITDA.
Oh, that's implied by the guidance we're.
Given when you can do that you can do the math and figure out exactly what's implied by that.
So we're pretty confident that we're going be able to hit those targets, which is why we're reiterating that guidance.
Yeah, Phil I think listen on them.
We flagged this on the last call and I'll conclude flanker from.
With some of our shareholders.
Is there some we've seen reversal, obviously with the elevated levels of move churn.
And we've seen some impact.
Gardening.
<unk> and if you see the footnote on slide 5.
We've got about 10.7000 subscribers between.
New York at 70.
And some storm related.
Number is about $2.7 thousands that are going to effect coming into <unk> and.
To the third quarter, and if we take kind of our historical.
And save rates in terms of.
An undisclosed did.
Clients debt that have been.
Balanced for games forgiven and effectively the same rate going forward. We're about 2 thirds. So we've got about 4000 ish numbers.
From a storm related and regulatory related customers, but the biggest issue is released.
And let.
Levels of move churn.
And as we flagged in some of the commentary with.
<unk> seen about 14000.
Incremental move churn in the second quarter of this year relative to the second quarter of 2019.
And so we're being cautious here.
If move churn continues.
<unk> seen.
Elevated level to move churn in July.
Then the numbers that we expect it to hit.
For the year, which were historical 18.19 numbers, we may come in light on that.
But we have to really see if those elevated levels of churn and continue.
Just to refresh my memory I think in 18 and 19 with about 72000.
Broadband net adds for each of those years last year in 2020, we did 142000 broadband net adds right. So.
Obviously, the business is growing on a cumulative basis 2021.
Versus 18.19.
But maybe not at the rates of $80.19 on individual years.
If elevated churn continues.
Dexter on that on that move churn.
The housing market share with strong I would think anybody moves out of the home someone else is moving back into that.
That.
Are you finding that you are losing share on churn now.
Net net share loser on customers, who turnover, whether its yours or someone else.
Well I think I think that would be a relevant comment necessarily for us if we had a much bigger footprint.
Yeah.
As you know just in the New York Tri State area.
We benefited from quite a bit of people, leaving the city to going to the outskirts of the city.
And that move churn is reversing effectively the other way.
So people are not.
Surely.
At full capacity penetration, replacing.
The the empty homes in long island and dorm.
Connecticut, or new Jersey that are coming back into the city.
So we have not.
It's not a share issue, we're just in our footprint.
Suddenly footprint and particularly also as you know you move down to the next town over that may not be a footprint.
So there is some rearrangement.
Again on a cumulative basis, if you take $72.72 in 2018 and 19 is $1.44.
We had $1.42 in 2020.
Materially beat the average.
Average of 18 to 19 to your point about housing activity, but.
But I do think we're going to see.
Some reversal where have seen some reversal.
And some of those gains that we did last year, which I just want to.
To bring down most likely the 18 and 19 absolute numbers relative to soften from 1.
Got it okay. Thanks, guys.
Your next question comes from the line of the other Nichelson from Credit Suisse. Your line is now open.
Oh, thanks, so much.
I just wanted to continue on the broadband path everything youre seeing in terms.
So changes in level of competition or promotions any shifts by you and your go to market strategy.
Or your marketing efforts on broadband that we should think be thinking about and then sort of separately with what's going on in our marketplace today.
When you think about your your big 3 initiatives to drive broadband growth going forward.
Sense of.
When we should see those really kick in for each I appreciate the update you're giving in terms of you know how many homes passed in and homes upgraded and fiber homes built when do those really kick in in terms of driving incremental subscriber growth relative to the company's historical case. Thank you.
Yes, that's a great question listen on.
Give us attrition.
Not seeing elevated levels of competition across the board.
People focus very much on the final numbers.
Last year in 2020.
In Q2 about 23% of our growth and activity happens in the finals footprint.
This quarter.
2021, 22% of our activities happening from the fast footprint right. So we're not seeing.
Major differences in terms of competitive environment, which is a.
Being driven by some of the larger competitors.
It is true that with the.
Income from lower activities around non pay disconnects that we've seen in the first half and I think that's that we've seen other cross our peers as well.
There is less.
<unk> gross add activity in general.
And if people are not disconnecting on non pay basis, and reconnecting with someone else right. So gross adds in general I think are down.
But in terms of where activity is we're still seeing the same amount of activity.
In such things as the SaaS footprint.
Versus historical numbers.
In terms of overbuild, we're not seeing any elevated levels of overbuilt either.
Particularly in the southern footprint.
Down so I think it's pretty much.
As usual you know.
If we put aside what's happening in and move churn and other regulatory and storefront, which which clean up in the third quarter of this year.
In terms of our Capex initiatives.
Kind of a big summer months.
Are now which is where most of the build activity.
Occurs.
So really mostly back ended fourth quarter, which really sets us up for a.
For 2022, I think we from we've signaled.
Going into this year at debt that 2022 and onwards.
We expect to see much more elevated levels from <unk>.
What that net adds.
So we're going to do about 250 to 300000 upgrades from settlement that they get delivered this year.
Most of them were going to get delivered at the back end of the third quarter going into the fourth quarter.
We've got 500000 ft.
Homes, this year and that number will increase going to 2 down from 22.
And we're on track to deliver 150000 edge out homes build this year, but again a lot of those are coming online at the end of the third quarter go into the fourth quarter. So.
Our penetration numbers of let's call it 40% in the first here.
We see from edge out.
Homes build.
That's really going to benefit our 2022 numbers.
Got it thank you.
Yeah.
Yeah.
Your next question comes from the line of arrest Feldman from Goldman Sachs. Your line is now open.
Hi, Thanks, I'm going to stick with the Capex theme, if you don't mind.
Now that you are sort of getting back on pace with the fiber deployment.
I imagine all of that or virtually all of that would be in.
Optimum regions, where youre competing with fires and so the first question would be at what point would you expect that you would have substantially upgraded the fires footprint to be fiber on year end and then when you get to that point.
What do you expect to do that and do you see merit in continuing with the fiber rollout across other portions of the footprint.
Footprint, because there are certain cost savings and if youre not going to do that what would be very high on the capex or the capital allocation prioritization list at that point in time and then just a quick question on the edge outs, how much of that is building your network, where new homes are being built versus expanding into areas, where you previously didn't.
Operating and why is now the right time to do that thank you.
Sure listen on specifically on the file with fiber footprint, we expect to be built out over the next 2 years. So by the end of 2023.
We would have covered the.
The 3 million homes passed where we compete.
Pete with vials.
Thereafter, we absolutely will look to do more.
There are areas that we were that are going to be prohibitively expensive.
So it's not necessarily only in the up from footprint, but.
A lot of our edge out homes built.
Other going it can be.
Done.
Fiber to the home.
Or we're going to be doing it in quasi fiber to the home and archrock effectively basis and so.
We're going to continue to deploy fiber to the home actively across our footprint.
But obviously after.
Finishing in 2023, the big bulk of fiber outweigh and won't be it will have been done and then we will have to look debt selectively attractive ROI situations to your point about cost savings.
And longer term effects in terms of revenue effects.
Going forward.
Nick this.
We used 1 by 1.
What growth you asked in terms of edge outs.
Most of it is in terms of new homes build areas.
And then there are adjacent markets that are either DSL only.
Choices.
Or.
Sure.
Buying smaller mom and pop.
Local operators, where they do not have the advantage.
There are very high performing network or in terms of from of.
Attractive bundled services.
Debt that we have and so.
Most of most of our new homes build activity today.
It remains.
New areas, new homes built, particularly in the Texoma area.
But we do see certain areas, where we are overbuilding just purely.
From smaller operators.
Where we think we have a real competitive advantage.
Thank you.
Next question is from John from John Hodulik from UBS. Your line is now open.
Great. Thanks.
Dexter.
From a clarification on the on the high speed data side.
We think that given the trends you're seeing.
The price of the quarter that you can grow high speed data adds in the third and the fourth quarter.
And then.
My second question is on the mobile strategy, obviously rebranding.
Operating footprint.
Any.
Expectations for maybe being a bit more again.
Yes, if I saw the 5000 adds this quarter, but.
What do you see as the opportunity there on the on the wireless side until we expected from the changes to the current strategy.
Yes, I think the answer on the first 1 we're on a reported basis, we're at 12000 year to date.
Through the first half a day.
The net adds we absolutely expect to be.
And through that net net positive both from third and fourth quarter.
In terms of mobile strategy.
Really this was based on the fact that we finally have migrated everything onto the T Mobile network.
Net of churn rates have gone almost virtually had.
In the first 6 months of this year.
And you know assuming everything continues to be on that basis, we absolutely want to get a lot more aggressive here on the marketing strategy.
Going forward, so probably more around the back to school type of event.
A lot of promotions and marketing activity happens.
Through to the end of the year.
Here, we'll be looking at from being more aggressive in the mobile side.
Thanks.
Next question is from James Rasmus. That's also speak State Your company name. Your line is now open.
Thank you with Evercore ISI.
2 if I could first of all regarding churn.
How are you doing in non move churn so voluntary customer switching to 2 other providers may have you seen a shift in terms of call. It. The net flows on that front and then secondly, with the goal of 4.5% to 5 turns of leverage what's the mix to get there.
In terms of EBITDA growth versus a reduction in absolute net debt over time. Thanks.
I think on churn.
Non pay disconnects have ups and done a lot better.
Than historic levels, which makes a lot of sense, given given the trends coming out of the pandemic.
And voluntary churn has been pretty stable across the footprint right.
Pockets here and there where you do see aggressive promotional activity will there be from AT&T in your files.
Every now and then or smaller mom and pop operators.
Overall, we're seeing a voluntary churn.
There, but the non pay disconnect churn.
Improvements are not outweighing move churn numbers that we're seeing.
In terms of leverage.
I think.
We look at this in lots of different ways, obviously, oh <expletive> the share buyback strategy is really going to be very.
That statement.
On cost of capital and and where the stock is trading and those types of events and whether or not we have M&A opportunities.
But you know it should be a mixture of them.
Our free cash flow.
Deleveraging as well as EBITDA growth.
Yeah.
Thank you.
Next question is from Ben Swinburne from Morgan Stanley. Your line is now open.
Thanks, Good afternoon.
2 questions first on Altice stream Dexter.
From the stream and suddenly extreme just if you could talk a little bit more about that strategy and sort of product plan.
Yeah.
Hey, guys I know you have a lot of apps on the Altice 1 box. So why did it make sense to sort of go with.
The streaming stick approach in.
And are you have you considered.
Broader marketing push beyond the 1 gig service it's Dennis.
Our product is probably not too expensive.
For you guys.
Interestingly wholesale I'm just curious if you think about using that.
More aggressive market day or bundling approach than what you've done so far.
And then I just wanted I was curious I don't think anyone's asked about E. B B and there were some comments earlier in the quarter that that was not a major driver of net adds in the quarter. Just curious now that we have the.
The quarter in the books, if you had any comment on the size or benefit from Edp on net adds thanks.
On the screen side then.
This is the strategy is pretty simple right.
The VLT from 1 experience with a great experience for those heavy users of large bundle.
Especially but the capex associated with them with debt product.
Significant.
And with the attachment rates continue to fall on the bundled product, where you know we're kind of in the high <unk> low 60.
2.3 years ago, and they were kind of in the 30% to 35%.
Percent level today in terms of video attachment rates.
There is a desire for.
For on 1 P broadband subscribers to have a video product alternative that's very cheap and cheerful right. So.
When you get into your midstream box for free.
And your 1.1.
<unk> subscriber that's an attractive product from a lot of people or mainly OTT based and to the extent that we ever want to get a bundled package on an OTT basis. They can do it also over the stream product.
So it's really a capex play being reactive also to what our consumers.
Consumers want to know how our consumers are behaving today.
With most of their activity on the video side being OTT based and if you really look at them at.
What we spend and how easy deploy stream box personalities 1 box that's a no brainer. So there is there is a box.
As for 1 type of subscriber and then.
Boxes for other types of subscribers.
Debt that.
We think there is going to help the stickiness with our customers.
On the other 1 gig.
Product absolutely, we expect to go to multi gig.
As we've.
Spoken about relating to our <unk> product.
Are we going to be more aggressive on bundles and marketing.
Yes, I would assume so as we go into 2022 and launched multiple products.
Have we started to signal.
What we're gonna do not yet but we.
We have put in their orders.
For multi gig modems up to 10 gig and so that will be a product that we're going to we're going to deliver and launch in 2022.
On the EBV from.
This is a small number of subscribers I think we had about 29000.
Applications year to date.
And we've had about approvals of about $6.5000.
Approvals, but of those 6.5000 approvals.
Only about 3 or 400, new customers the rest of our existing customers who have benefited.
From a subsidy.
Got it and Thats, how we too saw day impact.
Too small to impact <unk> I assume right, yes, absolutely tiny exactly yes, okay. Thank you.
Next question is from <unk> from RBC capital markets your.
Your line is now open.
Great. Thanks for taking the questions a few on fiber if I could it's great to see the accelerating momentum with the build in penetration you touched on this a bit in a prior answer but I was hoping for a bit more color specifically with fiber in terms of the timing of the benefits you expect to see across customer metrics.
Metrics revenue Opex and Capex in other words, given the build plans you have ahead would you expect to see a discernible impact to your consolidated results exiting this year into 2022 or should we think about it more of a 2023 and beyond event and just lastly, I know youre not guiding to 2024 or 2000.
Today, but as you move beyond the big bulk of the fiber outlays in 2023 should we expect the call it $300 million to $400 million of annual fiber capex to roll off then thanks.
Other questions.
Brian threw some of them which is.
Clearly on the Capex side on fiber related Capex.
The big bulk of our fiber capex is going to be coming in 2022 and 2023.
And <unk> and then we should see a reduction in our fiber.
Fiber spend capex in 2024 and onwards.
In terms of.
Consolidated let's call it more opex related from St.
The Capex question Opex related benefits.
<unk> levels are still quite small.
Now.
And so I think we.
We had always flagged debt.
Probably somewhere maybe.
2 to 3 quarters 3 to 4 quarters from now we'll get a better sample size.
But we have already seen.
Satisfaction incidence rates come down by about 30%.
On our fiber subscribers, we know.
Debt those numbers.
Can improve from there.
Inefficiently given their experiences in other geographies around the world.
And so we.
Know that theres going to be a positive.
I don't think I think the numbers are too small to day for us to even to flag anything new but it's probably something more of a 2023 effects.
Where you start seeing some hopefully some meaningful.
Thanks.
In addition to the fact that <unk>.
Service related.
Visits.
As well as calls into the call center continuing to reduce nicely. We saw that in 2020 that is continuing into 2021.
And with that the continued investment in network here and in products.
We expect hopefully this number to continue to fall. So there's a bunch of initiatives here that are affecting.
Better service related Opex numbers.
Thank you.
Next question is from Jonathan Chaplin from New Street. Your line is now open.
Couple of quick ones. So we saw.
<unk> got an incredible ambient air from AT&T, Dexter, but I'm wondering if that.
Is an opportunity for you.
Guys.
As well to improve on the <unk> that you've got.
With T mobile at the moment.
Shopping is around the <unk>.
The alternative that I talked about in the past is is finding somebody to hop into the Comcast charter and it seems like Dennis is pretty compelling.
And related to me.
Wondering if.
Give us a sense for what.
What the fixed cost base in in in mobile is there kind of what's driving costs.
In that business at the moment cheap cost stay flat from.
I'm here and you.
As of course subscribers and revenues are growing against that.
If you can.
Or a pop from your MD&A cost is there is there other variable costs that we need to think about and then.
Unrelatedly don't gain.
Reports on upbringing pressures in parts of your network.
And I know some of your blood doing we're looking at an upgrade.
Coffee 2 gigahertz with the highest split is that something you guys need to think about in portions of your network as well.
Or is it entirely by by the the fiber deployment, you can sort of get by with what you've got until you put fiber everywhere.
[laughter].
Lot of questions just from the MBA listen, yes, absolutely. We continue to always monitor what else is going out in the market.
T Mo has been a great partner.
Very constructive on a whole host of issues with us.
And so we like our partnership.
I think economics can improve and we continue to have discussions.
With them, so I think.
We are aware of what's going on.
Are you getting inbound calls from people.
On that but we also are very very happy here I currently with T. Mo.
On the cost day.
There is.
It's really too too variable factors, obviously, 1 is the direct costs.
With a roaming charges and.
The second is marketing costs right and so.
We are.
Keen to bring this business to EBITDA breakeven to positivity by the end of next year.
We are as you as we have said 70% of our.
Gross adds are now taking a per gig product.
Which is.
Very nice margin positive product.
And only 30% of our basic taking unlimited and.
Today about 80% of our base is unlimited and 20 percentage on a per gig basis. So.
These numbers are going to flip out those numbers continued to flip in the right gross profit profile.
All of the incremental.
Quarter over quarter, the numbers are getting better and beyond.
The net cost is really a cost of marketing costs.
So as we see churn rates come down customer service and Metro cities and Onboarding experiences.
Get better and better.
And we continue to deliver.
Attractive margins for all of our new subscribers.
And there is really going to do we put a push on marketing every now and then to drive volumes to accelerate that pace.
That's really the thing to look out for brown.
From a third speeds.
Listen we made some.
Changes.
In certain of our footprint on upload speeds.
Those upload speeds are new upload speeds that we're moving towards.
Are on par or better than any of our peers.
At the same speeds, we just were a major outlier in terms of our current approach speeds.
The changes.
The changes were really getting driven by.
Some heavy heavy usages.
And by certain users who are let's call it the hoarding.
A lot of bandwidth.
And so this is going to allow us to provide a much much better uniformity.
And service across certain of our footprint.
There, but to your point this is really a short term.
Particularly in the operating footprint.
Relative to our fiber deployment, where many of the communities that have raised their hands on.
On this announcement.
Are going to get overbuilt with fiber over the next 12 to 24 months. So we have signaled that to the relevant growth.
Inventory.
Elements and various.
Neighborhoods and states and so I think this is just a.
More of a PR.
<unk>.
There is an effect affecting any of our customers in terms of the services that they were seeing.
Thanks, Nick.
The next question is from Craig Moffett from Marcellus and Vincent Your line is now open yes.
Yes, hi.
I Wonder if you could just.
Talk a little bit about broadband pricing you talked about the competitive environment in promotion Ality earlier, but it seems like your broadband prices are now somewhat higher than Verizon can.
Can you just talk about what experience you have when your prices are.
Our lower or higher than Verizon.
In certain places where you compete in different environments.
And how you think about customizing pricing to the competitive environment in individual geographic areas.
Yeah, I mean listen I think Craig.
We'd wanted to our broadband.
Net pricing very closely.
We are consistently.
It usually 5 to $10 cheaper when you add in all the fees.
And.
And then mogens related fees there, so that's really not where we're seeing.
Pressure from Verizon, where we do see pressure from Verizon.
Is on their marketing campaign, where they start adding.
Free OTT services aggressively.
Adding on gift cards and adding on.
Bundling discounts with wireless so the combination.
Nation.
<unk>.
Those 3 things OTT freebies gift cards.
And the bundling is where we see pressure right when you come and aggressively on those fronts.
Those are obviously starting to see on a combined basis, a lot more attractive pricing relative to.
What we have Frank so there are lots of different things that we look at.
2 to counter that.
But if you look just purely on video pricing today.
15% to $20 higher than ours.
And.
They are redistributed in the 15 to $20.
Our Peru into into more aggressive marketing campaigns on broadband right. So there are a lot of things to look at in terms of what we can do but that's really the driver it's not really about pure 1 P. Broadband pricing, we don't see pressures on a debt basis on just unique lumpy.
Hi.
Is there how much flexibility do you think you have to price differentially in areas, where youre up against <unk> versus not I would think sort of from a regulatory perspective that's.
Challenging sometimes.
I'm, sorry price at that 1 more time.
How much.
Price its ability do you feel like you have to price differentially and in areas, where you are up against buyouts versus where youre not I think from a regulatory perspective, I can imagine that it might be somewhat challenging to have significantly different prices for.
For a different competitive market.
Listen.
And I think we.
Review pricing for let's call it less competitive areas regularly as indeed for competitive areas.
1 uniformity in our pricing.
Particularly geographically in states.
In regions.
<unk> from its regions.
But sometimes we'll have.
Differential pricing, depending where we are and there are reasons for that and maybe.
Because of length less dense areas of our cost of servicing those areas a lot higher.
And those types of things.
So there are a lot of factors come into our pricing.
Strategy.
But.
Clearly regulatory is the factor.
We are aware of.
As well as.
Just.
Local environment and local competitive environment issues.
That's helpful. Thank you.
The next question is from Brian Rath from it.
Shebang Your line is now open.
Hi, Good afternoon wanted to ask a couple of questions on debt.
Lightpath and advertising side for Lightpath can you talk about the opportunity you see with the acquisitions that you've announced in the Boston area and also the expansion.
Queens, how should we think about the impact on Lightpath growth going forward from those things and then can you maybe just talk about your expectations for news and advertising in the second half of the year, given the tough political comps, but much easier core comps. Thanks.
Yes listen on Lightpath.
We have not.
<unk> got a lot of money I think that's about $40 million on.
Area.
Small business acquisition or just buying from networks or some higher Hughes.
But I think this isn't a outsized opportunities for us to make over time meaningful moves into new markets.
Expenses and get outsized returns on very small investments so.
These are the things we like that.
New management team is putting in front of us clear.
Clearly if there are larger things for us to do we will absolutely look to do that we think that.
We're right on the right path here.
Deliver much higher growth numbers like that it's going to take a look at the timing of these acquisitions are small 2.
2022, and I'd be surprised if we saw a meaningful move.
In top line from new areas, but I suspect in 2023 onwards, we will do.
So.
So this is a good story to monitor the numbers are small today, but.
But they could get bigger so we like what the management team.
On the news and advertising.
We're cautious of trying to.
To manage expectations too.
This is there anything more than the 2020, new from advertising numbers.
Because we have a 60 million dollar political comp.
The difference between 2020 in 2021.
So if we can do as well as 2020.
And slightly better that would be great that would be very very good news and then we'll go back into the political cycle in 2022. So.
Things that Jon Steinberg and his team have been doing have been great. They've been able to obviously Q2 has been a big quarter relative to last year because.
Down quarter relative to.
To COVID-19, but we're growing our business.
<unk>.
All of our divisions.
And making up for <unk>.
Big lots of political revenue this year, so expectations are for us to be.
Revenue flat.
Does it will be hopefully slightly up.
Got it okay. Thank you very much.
Next question is from Andrew <unk> from average research. Your line is now open.
Okay.
Hi, I just wanted to come back to you.
Flat organic data at that time.
<unk> 2.
Let me share in our non pay disconnect from commentary.
I mean, I think second quarter normally has a drag from Coca Cola trademark name Governor Inc.
So you mentioned the 14.14.
MS. Karen can you sort of look back to Nick Crissy.
From a 7000.
Extra from pace.
From disconnects.
So I guess my question is.
Which products are youll find Charles are you seeing the accessing posted net adds this quarter against these multiple drugs.
Whether you can do a quota system is really about the ultimate final says about growth, but good momentum.
Got it.
Franchises.
Sure.
So is there anything to say about supplement growth ex students seasonality will perhaps you've done something differently about the way their student contracts worth.
No listen I think Andrew.
Probably a disproportionate amount of increased move churn we're seeing.
He is in the optimum footprint.
That shouldn't be a surprise.
Got it.
There so I think the suddenly footprint.
As you rightly mentioned historically Q2.
The C L.
Elevated levels from <unk>.
Move churn.
<unk> of all the college towns that we have there.
But we are seeing most of the.
It's disproportionate amount of new term affecting.
The operating footprint.
So that's really the key.
The key item there.
Right.
Positive.
Absolutely.
Is there and Thats answers.
It's coming mainly Wap.
Well, let's.
Being continued nice elevated activity and growth coming from the sudden footprint and so the growth that activity continues.
<unk> continues to build very well, which is why we feel good about.
Our edge out strategy in our upgrade strategy at settlement.
Okay great.
Yes.
Stick with your last question comes from the line of from Mike Rollins from Citi. Your line is now open.
Thanks, and good afternoon, I'm, just looking at day disclosures around broadband.
<unk> for the broadband only users and it looks like it was down sequentially from last quarter I get about 6.
<unk> hundred 18.
Gigabytes to about 558 net income a year ago call. He may have referenced a number at about 550 gigabytes and so I'm just curious if you could share some observations in terms of what might be impacting a sequential downtick in usage or the.
<unk> growth.
Both year over year.
And what this might mean for the future direction, whether it's for the consumption of your customers or how this might or might not impact the type of speed tiers and spending levels that they subscribed to with altice.
I mean, I don't think we have a.
We will read as 2.5%, 10% differentials here other than the upward trend continuing to go in the right direction.
I think there could be something to be said about.
People being less at home.
Going forward.
Maybe kind of a.
To an office type of levels, but the expectation is we're going to continue to see those usage is right now 1 other things to remember is that.
As the attachment rates.
On video continued to fall.
We're seeing a lot more 1 P users right. So the sample size is growing.
A lot quicker than it has historically.
And so those 1 P usage I would assume probably dragged down the moving a lot more.
Thanks.
You don't have that in my questions presenters you may end the call.
Thank you very much for joining other 1 theory channel. If you got any follow up questions otherwise see you've actually I suppose in the next few months. Thank you.
Thanks very much thank you.
This concludes today's conference call. Thank.
We're anticipating you may now disconnect.
Okay.
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