Market Overview

Altice USA Reports Second Quarter 2018 Results

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Accelerating Revenue Growth with Free Cash Flow Growth +73% YoY

Residential Data Units Growth; Video Units Better than Expected

Spin-Off from Altice N.V. Complete

Altice USA (NYSE:ATUS) today reported results for the second quarter
ended June 30, 2018.

Dexter Goei, Altice USA Chief Executive Officer, said: "We are very
pleased with Altice USA's second quarter performance, which included
improved subscriber trends, accelerating revenue growth and a material
step up in free cash flow. Our residential video business is trending
better year over year and we continue to see significant increases in
data usage on our broadband network, driven mostly by video streaming
across multiple devices in the home. As a result, our customers are
demanding faster broadband speeds and enhanced WiFi coverage. We are
facilitating these evolving data consumption needs through our network
upgrades to provide the best connectivity services and quality
experience, allowing us to achieve continued improvements in our
subscriber trends and higher cash flow conversion. Our investments in
broadband including FTTH, Altice One and Altice Mobile, are advancing
this strategy by providing a platform for converged fixed / wireless
services and seamless integration of linear and OTT video content which
we believe position us extremely well for the future. Lastly, the strong
growth we are seeing in our a
4 targeted digital
advertising business demonstrates our success in developing new and
innovative products for advertisers."

Altice USA Key Financial Highlights

  • Revenue growth of +1.8% YoY in Q2 2018 to $2.36 billion, driven by
    Residential revenue growth of +1.0%, Business Services revenue growth
    of +4.2% and advertising revenue growth of +12.7%
  • Adjusted EBITDA grew +1.5% YoY in Q2 2018 to $1.01 billion; Adjusted
    EBITDA margin was in line with prior year at 42.5% (+4.2% YoY Adjusted
    EBITDA growth excluding approximately $26 million of costs in the
    current period relating to i) the impact of consolidating i24 losses
    and legal matter accruals which were expenses not incurred in Q2 2017,
    and; ii) management fees and certain ATS US costs which will not be
    incurred in future periods1. Excluding these items Adjusted
    EBITDA margin was 43.6%)
  • Operating Free Cash Flow2 declined -2.5% YoY in Q2 2018 to
    $765 million with an OpFCF margin of 32.4% vs. 33.8% in Q2 2017 with
    higher investment in key growth initiatives
  • Free Cash Flow3 grew +73.4% YoY in Q2 2018 to $488m,
    supporting the $1.5 billion cash dividend paid to all Altice USA
    shareholders immediately prior to the separation from Altice N.V.
 
Three Months Ended June 30,
(NYSE:K) 2018   2017
Actual Actual
 
Revenue 2,364,153 2,322,362

Adjusted EBITDA4

1,005,503 990,525
Net loss (98,004) (479,939)
Capital Expenditures (cash) 240,682 206,163
 

Altice USA Operational Highlights

  • Total unique Residential customer relationships stable YoY (+0.1% YoY)
    with quarterly net losses of -4k in Q2 2018 improving compared to
    prior year (-12k in Q2 2017). Suddenlink driving improved customer
    trends YoY again with Optimum trends normalized in Q2 2018 as expected
    after Starz and storms impacts in Q1 2018
    • Pay TV RGU quarterly net losses of -24k in Q2 2018 were better
      than the prior year (-37k in Q2 2017) due to another significant
      improvement in Suddenlink's performance (-11k losses in Q2 2018
      vs. -25k in Q2 2017) ahead of full expansion of Altice One rollout
    • Residential broadband RGU quarterly net additions of +10k and
      telephony RGU net losses of -4k in Q2 2018 also improved compared
      to prior year (vs. +2k and -7k in Q2 2017 respectively)
    • Residential ARPU increased 1.0% YoY to $140.2 in Q2 2018,
      supporting Residential revenue growth of +1.0% YoY which is
      expected to accelerate in 2H 2018 with rate event (fully effective
      only from end of June 2018)
  • Solid Business Services revenue growth of +4.2% YoY in Q2 2018 boosted
    by strength in Enterprise & Carrier segment of +5.4% YoY with SMB
    growth of +3.6% YoY (expected to accelerate in 2H 2018 with rate event
    fully effective only from end of June 2018)
  • Advertising revenue growth of 12.7% YoY in Q2 2018 supported by
    investment in multiscreen and national targeted audience capabilities
  • Continued enhancement of data services with an increased demand for
    higher speed tiers and growing data usage; over 90% of Residential
    broadband gross additions taking download speeds of 100Mbps or higher
    at end of Q2 with over 60% of Optimum customers using over 100GB of
    data per month
  • Up to 400Mbps broadband speeds were available across 88% of Altice
    USA's footprint by the end of Q2 2018, including 98% of the Optimum
    footprint, with 73% of the Suddenlink footprint now able to receive up
    to 1 Gigabit speeds

Altice USA 2018 and Medium-Term Financial
Outlook Reiterated

For the full year 2018 Altice USA expects:

  • Revenue growth ~2.5-3.0% YoY
  • To increase investment for the continued rollout of Altice One, fiber
    (FTTH) deployment, and new MVNO network investment keeping with annual
    capex ~$1.3bn

Altice USA also reiterates its plan to expand its Adjusted EBITDA and
cash flow margins over the medium- to long-term.

Additional Q2 2018 Highlights

Product & Service Enhancements

In the second quarter, the company continued expanding the availability
of Altice One, the all-in-one entertainment platform that combines
video, internet and connectivity into one experience. Altice One soft
launched in the Suddenlink regions in the second quarter and we expect
to complete the rollout in the third quarter. Altice One has been
available throughout the Optimum footprint since January 2018 with the
initial focus on gross additions and ensuring the best quality service.
The migration of existing customers to the Altice One platform has
commenced in the second half of 2018. A further update to the Altice One
Operating System (OS) is expected to be launched in the second half of
the year with new features for customers.

Network Investments to Enhance Broadband Speeds, Video Services
and Reliability

Altice USA's fiber-to-the-home (FTTH) deployment continues to progress
well and the company remains on track to begin commercializing its fiber
services later this year. Following successful beta trials, the company
recently began its soft launch of a 1 Gig symmetrical internet-only
service in select areas in the Optimum footprint.

While building the FTTH network, Altice USA also continues to roll out
enhanced broadband services to its customers on its existing hybrid
fiber coax (DOCSIS) cable network, mostly following digitalization and
plant / CMTS upgrades. Of note, Suddenlink was once again rated the
fastest Internet Service Provider in the U.S. for 2018, according to PC
Mag5, and Optimum was named the most reliable cable Internet
Service Provider in the U.S. in the 2018 American Customer Satisfaction
Index (ACSI) survey6. As a result of our enhancements, an
increasing number of consumers are selecting increased broadband speeds
and using more data.

  • Up to 400Mbps broadband speeds were available for 88% of Altice USA's
    footprint by the end of Q2 2018 including 98% of the Optimum footprint;
  • Altice USA continues to see over 90% of Residential broadband gross
    additions taking download speed tiers of 100Mbps or higher at the end
    of Q2 2018 (76% of the Residential customer base now take speeds of
    100Mbps or higher, increased from just 39% at the end of Q2 2017);
  • Up to 1 Gigabit speeds were available for 28% of Altice USA's
    footprint by the end of Q2 2018, representing 73% of the Suddenlink
    footprint. In addition, the pace of new home builds at Suddenlink has
    accelerated, extending the existing network plant and addressable
    market;
  • These upgrades are allowing the company to meet customer demand for
    higher broadband speeds with the average broadband speed taken by
    Altice USA's customer base up 74% YoY to 162Mbps at the end of Q2 2018
    (from 93Mbps at the end of Q2 2017). Average data usage per customer
    reached over 220GB as of the end of Q2 2018, growing over 20% YoY as
    customers are using our broadband services more and more. Optimum
    customers are connecting 10 devices in the home on average with over
    60% of customers using over 100GB of data per month;
  • Altice One is also improving customers' broadband experience with an
    advanced WiFi router and WiFi mini repeaters, and a new Smart WiFi
    service is expected to launch by the end of 2018.

In addition, Altice USA continues its video QAM to IP transition on its
cable network to enhance its video service delivery, and Altice One has
been enabled for both QAM and IP video to support the transition.

The company's focus with these network upgrades is on improving the
quality of broadband WiFi / video services and cost efficiencies as well
as boosting speeds. As well as initially expanding the availability of
1Gig broadband services, the upgraded coax network and new FTTH network
will both be IP-based which is optimal for multi-device service
offerings and will be access network technology (fixed and wireless)
agnostic in the way services are offered to consumers. Continuous user
interface improvements will be possible as well as reducing CPE cost and
additional network cost efficiencies.

Mobile

In November 2017, Altice USA announced a multi-year strategic agreement
with Sprint whereby Altice USA will utilize Sprint's network to provide
mobile voice and data services to its customers throughout the nation.
In this agreement, Sprint will provide Altice USA with access to its
full MVNO model, allowing Altice USA to connect its network to the
Sprint Nationwide network and have control over the Altice USA mobile
features, functionality, and customer experience. In addition, Altice
USA maintains the flexibility to work with other network operators
without having to swap customers' SIM cards. During the second quarter,
Altice USA continued developing the core network to support this
infrastructure-based MVNO including upgrading and expanding its WiFi
network. The connection to Sprint microsites to support Sprint's network
densification, which will benefit Altice USA's MVNO service, is
currently running well ahead of schedule. The commercial launch of a
mobile service for Altice USA customers is still on track for 2019.

Content

i24NEWS recently secured a carriage agreement with another large MVPD
for the distribution of the network, following separate carriage deals
with Charter, Mediacom, and Altice USA's Optimum and Suddenlink systems.
With global headquarters in Tel Aviv, European headquarters in Paris,
and U.S. headquarters in New York City, i24NEWS is the only 24/7
international news and current affairs channel broadcasting from the
heart of the Middle East. It is available in millions of households
worldwide, and offers live news reports daily to viewers, providing a
unique and connected international news organization in the marketplace.

Altice USA Spin-Off Complete

On June 8, 2018 Altice USA announced that the planned separation of
Altice USA from Altice N.V. had been implemented, as expected. The
separation was effected by a spin-off of Altice N.V.'s 67.2% interest in
Altice USA through a distribution in kind to Altice N.V. shareholders7.

As part of the spin-off transaction, Altice USA paid a $1.5 billion cash
dividend to all shareholders immediately prior to completion of the
separation on June 6, 2018.

As a result of the spin-off there has been a significant increase in the
free float of Altice USA from approximately 10% to 43.7% as of the end
of July 2018 (based on public minorities economic ownership of Altice
USA A- and B-shares, excluding sponsors and the Altice USA Next Concert).

Financial and Operational Review

For quarter ended June 30, 2018 compared to quarter ended June 30,
2017

  • Reported revenue growth for Altice USA of +1.8% YoY in Q2 2018 to
    $2,364m:
    • Optimum revenue growth +1.6% YoY;
    • Suddenlink revenue growth +3.0% YoY.
  • Adjusted EBITDA grew +1.5% YoY in Q2 2018 to $1,006m; Adjusted EBITDA
    margin was in line with prior year at 42.5%, compared to 42.7% in Q2
    2017 (+4.2% YoY Adjusted EBITDA growth in Q2 2018 excluding
    approximately $26m of costs relating to i) the impact of consolidating
    i24 losses and legal matter accruals which were expenses not incurred
    in Q2 2017, and; ii) management fees and certain ATS US costs which
    will not be incurred in future periods8. Excluding these
    items Adjusted EBITDA margin was 43.6%):
    • Optimum Adjusted EBITDA growth of +3.0% YoY; Adjusted EBITDA
      margin increased +0.6 percentage points YoY to 41.2% due to
      realization of efficiency savings (vs. 40.7% in Q2 2017);
    • Suddenlink Adjusted EBITDA declined -1.6% YoY; Adjusted EBITDA
      margin decreased -2.2 percentage points YoY to 45.4% mainly due to
      higher content expense from adding back Viacom content in Q4 2017
      and less capitalization of CPE ahead of the full launch of Altice
      One (vs. 47.6% in Q2 2017).
  • Cash capex for Altice USA was $241m in Q2 2018, representing 10.2% of
    revenue.
  • OpFCF for Altice USA declined -2.5% YoY in Q2 2018 to $765m mostly
    reflecting increased investment in new fiber (FTTH) and the launch of
    Altice One:
    • Optimum OpFCF declined -1.7% YoY;
    • Suddenlink OpFCF declined -4.2% YoY due to higher content expense
      from adding back Viacom and higher capex related to a step up in
      new home builds.
  • Free Cash Flow for Altice USA grew +73.4% YoY in Q2 2018 to $488m.
  • Altice USA saw total unique Residential customer relationship
    quarterly net losses of -4k in Q2 2018, including Residential
    broadband RGU net additions of +10k, pay TV RGU net losses of -24k,
    and telephony RGU net losses of -4k in Q2 2018 (vs. +2k, -37k, and -7k
    in Q2 2017 respectively). Altice USA Residential ARPU per unique
    customer increased 1.0% YoY in Q2 2018 to $140.2:
    • Optimum's base of unique Residential customer relationships grew
      by +2k net additions in Q2 2018, in line with last year with the
      customer trends normalizing as expected following the Starz
      dispute and multiple storms in Q1. Optimum achieved broadband RGU
      net additions of +8k, -13k pay TV RGU net losses and -4k telephony
      RGU net losses (compared to Q2 2017 with +10k broadband RGUs net
      additions, -12k pay TV RGU net losses and -1k telephony RGU net
      losses). Altice USA continues to have a strong competitive
      position in the Optimum footprint, enhanced with the recent full
      commercial launch of Altice One. Optimum Residential ARPU per
      unique customer was stable YoY (+0.1% YoY) with a delayed rate
      event only fully effective from the end of June 2018;
    • Customer trends at Suddenlink reflected normal seasonality in Q2
      2018 but were better than the prior year. Suddenlink unique
      Residential customer relationship net losses of -5k in Q2 2018
      were lower compared to -14k net losses in Q2 2017. Completing the
      rollout of Altice One across the Suddenlink footprint by the end
      of Q3 2018 will further support trends here. Broadband RGUs grew
      in Q2 2018 with quarterly net additions of +2k (compared to
      broadband RGU net losses of -8k in Q2 2017). Pay TV RGU net losses
      of -11k were again significantly better than the prior year (-25k
      in Q2 2017). Telephony RGU net additions of +0k were also better
      than the prior year (vs. -7k in Q2 2017). Increased demand for
      higher speed broadband tiers at Suddenlink continues to drive
      growth in Residential ARPU per unique customer (+3.0% YoY).
  • Altice USA's Business Services revenue increased +4.2% YoY in Q2 2018
    boosted by strength in the Enterprise & Carrier segment +5.4% due to
    several large wins in the Education & Carrier verticals. SMB revenue
    increased +3.6% YoY in Q2 supported by customer growth and increase in
    ARPU by sell-in of more services (SMB growth expected to accelerate in
    2H 2018 with rate event fully effective only from end of June 2018).
    Overall customer growth of +2.2% YoY due to improved value proposition
    with voice and data bundles and reduced churn.
  • Altice USA's Advertising revenue increased +12.7% YoY in Q2 2018
    primarily due to an increase in digital advertising revenue and an
    increase in data and analytics revenue. Altice USA now has a targeted,
    multi-screen platform, integrating TV and digital advertising into a
    single buy. This includes audience targeting supported by rich,
    privacy-compliant household data sets with an automated self-serve
    model for advertisers. Campaign management is supported by robust
    analytics and attribution.
  • Altice USA's programming costs increased +4.5% YoY in Q2 2018 due
    primarily to an increase in contractual programming rates, partially
    offset by the decrease in video customers. Programming costs per video
    customer are still expected to increase by high single digits going
    forward (+8.2% YoY in Q2 2018):
    • Optimum's programming costs increased +2.1% YoY in Q2 2018 to
      $492m;
    • Suddenlink's programming costs increased +12.3% YoY in Q2 2018 to
      $169m.
  • Net debt for Altice USA at the end of the second quarter was $21,655m9,
    an increase of $1,087m from the end of the first quarter of 2018
    reflecting the $1.5bn cash dividend paid prior to completion of the
    spin-off of Altice USA from Altice N.V., partly offset by free cash
    flow generation. This represents consolidated LTM net leverage for
    Altice USA of 5.3x on a reported basis at the end of June 2018 (5.4x
    L2QA). Net leverage for Optimum was 5.3x and for Suddenlink was 5.3x
    at the end of June 2018 on LTM basis (5.4x L2QA for both
    respectively). The leverage target for Altice USA remains 4.5-5.0x net
    debt to EBITDA.
  • Altice USA has seen significant and rapid deleveraging at both Optimum
    and Suddenlink since the completion of their respective acquisitions
    as a result of underlying growth and improved cash flow generation
    (consolidated LTM net leverage has fallen from 7.1x at Q2 2016 to 4.9x
    pre-cash dividend in Q2 2018).
  • Altice USA's blended weighted average cost of debt was 6.4% (6.7% for
    Optimum, 5.7% for Suddenlink) and the blended weighted average life
    was 6.3 years at the end of June 2018. There are no material
    maturities at Suddenlink until 2021, and near-term maturities at
    Optimum are covered by a $2.3bn revolving credit facility.

Altice USA Consolidated Operating Results
(Dollars in
thousands, except per share data)

   
Three Months Ended June 30,
2018  

2017 10

Actual Actual
Revenue:
Pay TV 1,034,404 1,071,163
Broadband 712,202 642,620
Telephony 163,499 178,261
Business services and wholesale 337,388 323,641
Advertising 109,898 97,501
Other 6,762 9,176
Total revenue 2,364,153 2,322,362
Operating expenses:
Programming and other direct costs 795,127 758,694
Other operating expenses 575,749 591,222
Restructuring and other expense 9,691 12,388
Depreciation and amortization 648,527 706,790
Operating income 335,059 253,268
Other income (expense):
Interest expense, net (385,230) (420,190)
Gain (loss) on investments and sale of affiliate interests, net (45,113) 57,130
Gain (loss) on derivative contracts, net 42,159 (66,463)
Gain (loss) on interest rate swap contracts (12,929) 9,146
Loss on extinguishment of debt and write-off of deferred financing
costs
(36,911) (561,382)
Other expense, net (629) (3,935)
Loss before income taxes (103,594) (732,426)
Income tax benefit 5,590 252,487
Net loss (98,004) (479,939)
Net loss (income) attributable to noncontrolling interests 149 (365)
Net loss attributable to Altice USA stockholders (97,855) (480,304)
Basic and diluted net loss per share $(0.13) $(0.73)
Basic and diluted weighted average common shares (in thousands) 737,069 659,145
 

Reconciliation of net loss to Adjusted EBITDA and Adjusted EBITDA
less Cash Capital Expenditures:

We define Adjusted EBITDA, which is a non-GAAP financial measure, as net
income (loss) excluding income taxes, income (loss) from discontinued
operations, other non-operating income or expenses, loss on
extinguishment of debt and write-off of deferred financing costs, gain
(loss) on interest rate swap contracts, gain (loss) on derivative
contracts, gain (loss) on investments, interest expense (including cash
interest expense), interest income, depreciation and amortization
(including impairments), share-based compensation expense or benefit,
restructuring expense or credits and transaction expenses.

We believe Adjusted EBITDA is an appropriate measure for evaluating the
operating performance of the Company. Adjusted EBITDA and similar
measures with similar titles are common performance measures used by
investors, analysts and peers to compare performance in our industry.
Internally, we use revenue and Adjusted EBITDA measures as important
indicators of our business performance, and evaluate management's
effectiveness with specific reference to these indicators. We believe
Adjusted EBITDA provides management and investors a useful measure for
period-to-period comparisons of our core business and operating results
by excluding items that are not comparable across reporting periods or
that do not otherwise relate to the Company's ongoing operating results.
Adjusted EBITDA should be viewed as a supplement to and not a substitute
for operating income (loss), net income (loss), and other measures of
performance presented in accordance with GAAP. Since Adjusted EBITDA is
not a measure of performance calculated in accordance with GAAP, this
measure may not be comparable to similar measures with similar titles
used by other companies.

We also use Adjusted EBITDA less cash Capital Expenditures, or Operating
Free Cash Flow, as an indicator of the Company's financial performance.
We believe this measure is one of several benchmarks used by investors,
analysts and peers for comparison of performance in the Company's
industry, although it may not be directly comparable to similar measures
reported by other companies.

Altice USA (Dollars in thousands)

   
Three Months Ended June 30,
2018  

201711

Actual Actual
Net loss (98,004) (479,939)
Income tax benefit (5,590) (252,487)
Other expense, net 629 3,935
Loss (gain) on interest rate swap contracts 12,929 (9,146)
Loss (gain) on derivative contracts, net (42,159) 66,463
Loss (gain) on investments and share of affiliate interests, net 45,113 (57,130)
Loss on extinguishment of debt and write-off of deferred financing
costs
36,911 561,382
Interest expense, net 385,230 420,190
Depreciation and amortization 648,527 706,790
Restructuring and other expense 9,691 12,388
Share-based compensation 12,226 18,079
Adjusted EBITDA 1,005,503 990,525
Capital Expenditures (accrued) 277,042 231,999
Adjusted EBITDA less Capital Expenditures (accrued) 728,461 758,526
Capital Expenditures (cash) 240,682 206,163
Adjusted EBITDA less Capital Expenditures (cash) 764,821 784,362
 

Cablevision (Dollars in thousands)

   
Three Months Ended June 30,
2018  

201712

Actual Actual
Operating income 203,265 109,799
Depreciation and amortization 473,138 542,203
Restructuring and other expense 8,515 11,171
Share-based compensation 10,357 11,960
Adjusted EBITDA 695,275 675,133
Capital Expenditures (accrued) 184,775 158,749
Adjusted EBITDA less Capital Expenditures (accrued) 510,500 516,384
Capital Expenditures (cash) 170,356 141,166
Adjusted EBITDA less Capital Expenditures (cash) 524,919 533,967
 

Suddenlink (Dollars in thousands)

   
Three Months Ended June 30,
2018   201712
Actual Actual
Operating income 131,794 143,469
Depreciation and amortization 175,389 164,587
Restructuring and other expense 1,176 1,217
Share-based compensation 1,869 6,119
Adjusted EBITDA 310,228 315,392
Capital Expenditures (accrued) 92,267 73,250
Adjusted EBITDA less Capital Expenditures (accrued) 217,961 242,142
Capital Expenditures (cash) 70,326 64,997
Adjusted EBITDA less Capital Expenditures (cash) 239,902 250,395
 

Altice USA Customer Metrics

                             
In thousands   Q1-17   Q2-17   Q3-17   Q4-17   FY-17   Q1-18   Q2-18

Homes Passed13

  8,547.2   8,570.1   8,577.2   8,620.9   8,620.9   8,642.0   8,671.0
Residential (B2C) 4,548.4 4,536.9 4,529.0 4,535.0 4,535.0 4,543.4 4,539.8
SMB (B2B) 364.7 367.3 369.1 371.3 371.3 373.2 375.3

Total Unique Customer Relationships14

4,913.1 4,904.3 4,898.1 4,906.3 4,906.3 4,916.6 4,915.1
Pay TV 3,499.8 3,462.7 3,430.2 3,405.5 3,405.5 3,375.1 3,350.9
Broadband 4,002.8 4,004.4 4,020.9 4,046.2 4,046.2 4,072.6 4,082.1
Telephony 2,551.0 2,543.8 2,547.2 2,557.4 2,557.4 2,549.7 2,545.6
Total B2C RGUs   10,053.6   10,010.9   9,998.3   10,009.1   10,009.1   9,997.4   9,978.6

B2C ARPU ($)15

  138.9   138.8   139.8   139.8   139.5   139.6   140.2
 

Optimum Customer Metrics

                             
In thousands   Q1-17   Q2-17   Q3-17   Q4-17   FY-17   Q1-18   Q2-18
Homes Passed13   5,128.4   5,139.7   5,134.4   5,163.9   5,163.9   5,174.0   5,187.3
Residential (B2C) 2,886.9 2,889.1 2,887.0 2,893.4 2,893.4 2,888.0 2,889.7
SMB (B2B) 261.2 261.8 261.9 262.6 262.6 263.2 263.8
Total Unique Customer Relationships14 3,148.2 3,150.9 3,148.9 3,156.0 3,156.0 3,151.2 3,153.5
Pay TV 2,412.8 2,400.9 2,382.2 2,363.2 2,363.2 2,340.1 2,327.3
Broadband 2,636.4 2,646.0 2,653.1 2,670.0 2,670.0 2,673.4 2,681.3
Telephony 1,955.0 1,954.3 1,958.8 1,965.0 1,965.0 1,953.5 1,949.4
Total B2C RGUs   7,004.2   7,001.2   6,994.1   6,998.2   6,998.2   6,967.0   6,958.0
B2C ARPU ($)15   155.5   155.5   156.6   155.4   155.8   154.5   155.7
 

Suddenlink Customer Metrics

                             
In thousands   Q1-17   Q2-17   Q3-17   Q4-17   FY-17   Q1-18   Q2-18
Homes Passed13   3,418.7   3,430.4   3,442.8   3,457.1   3,457.1   3,468.0   3,483.7
Residential (B2C) 1,661.5 1,647.8 1,642.0 1,641.5 1,641.5 1,655.5 1,650.1
SMB (B2B) 103.4 105.5 107.2 108.7 108.7 109.9 111.5
Total Unique Customer Relationships14 1,764.9 1,753.3 1,749.2 1,750.2 1,750.2 1,765.4 1,761.6
Pay TV 1,087.0 1,061.8 1,048.0 1,042.4 1,042.4 1,035.0 1,023.6
Broadband 1,366.5 1,358.4 1,367.8 1,376.2 1,376.2 1,399.2 1,400.8
Telephony 596.0 589.5 588.4 592.3 592.3 596.2 596.1
Total B2C RGUs   3,049.4   3,009.7   3,004.2   3,010.9   3,010.9   3,030.4   3,020.5
B2C ARPU ($)15   109.9   109.8   110.3   112.2   110.8   113.6   113.1
 

Consolidated Net Debt as of June 30, 2018,
breakdown by credit silo

     
Suddenlink (Cequel) - in $m   Actual  

Coupon /
Margin

  Maturity
Sn. Sec. Notes 1,100 5.375% 2023
Sn. Sec. Notes 1,500 5.500% 2026
Term Loan   1,252   L+2.250%   2025

Suddenlink Sec. Debt

  3,852        
Senior Notes 1,250 5.125% 2021
Senior Notes 620 7.750% 2025
Senior Notes 1,050 7.500% 2028
Other debt & leases   2        
Suddenlink Gross Debt   6,774        
Total Cash   (128)        
Suddenlink Net Debt   6,646        
Undrawn RCF 350
WACD (%) 5.7%
 
       
Cablevision (Optimum) - in $m   Actual   Pro Forma  

Coupon /
Margin

  Maturity
Guaranteed Notes 1,000 1,000 6.625% 2025
Guaranteed Notes 1,310 1,310 5.500% 2027
Guaranteed Notes 1,000 1,000 5.375% 2028
Senior Notes 500 - 7.625% 2018
Senior Notes 526 526 8.625% 2019
Senior Notes 1,000 1,000 6.750% 2021
Senior Notes 1,800 1,800 10.125% 2023
Senior Notes 750 750 5.250% 2024
Senior Notes 1,684 1,684 10.875% 2025
Term Loan 2,970 2,970 L+2.250% 2025
Term Loan 1,500 1,500 L+2.500% 2026
Drawn RCF - 575 L+3.250% 2021
Other debt & leases   21   21        
Cablevision New Debt / Total Debt LLC   14,061   14,136        
Senior Notes 500 500 8.000% 2020
Senior Notes   649   649   5.875%   2022
Cablevision New Debt / Total Debt Corp   15,210   15,285        
Total Cash   (253)   (253)        
Cablevision Net Debt   14,957   15,032        
Undrawn RCF 2,300 1,725
WACD (%)

 

6.7%
 

Altice USA Pro Forma Net Leverage
Reconciliation as of June 30, 2018

       
In $m
Altice USA   Suddenlink   Optimum   Altice USA Inc   Pro Forma
Gross Debt Consolidated   $6,774   $15,285   $-   $22,059
Cash   (128)   (253)   (0)   (381)
Net Debt Consolidated   6,646   15,032   (0)   21,678

LTM EBITDA GAAP16

  1,250   2,812       4,062
L2QA EBITDA GAAP16   1,240   2,758       3,999
Net Leverage (LTM) 5.3x 5.3x 5.3x
Net Leverage (L2QA) 5.4x 5.4x 5.4x
WACD 5.7% 6.7% 6.4%
 
In $m    
Altice USA Reconciliation to Financial Reported Debt   Actual   Pro Forma

Total Debenture and Loans from Financial Institutions (Carrying
Amount)

  21,520   21,520
Unamortized Financing Costs   255   255
Fair Value Adjustments   187   187
Total Value of Debenture and Loans from Financial Institutions
(Principal Amount)
  21,961   21,961
Other Debt & Capital Leases   23   23
Refinancing Impact   -   75
Gross Debt Consolidated   21,984   22,059
Cash   (381)   (381)
Net Debt Consolidated   21,603   21,678
 

Cablevision Operating Results
(Dollars in thousands)

   
Three Months Ended June 30,
2018  

2017 17

Actual Actual
Revenue:
Pay TV 766,257 796,456
Broadband 449,426 405,199
Telephony 133,635 145,323
Business services and wholesale 236,763 230,964
Advertising 95,981 78,802
Other 3,665 2,782
Total revenue 1,685,727 1,659,526
Operating expenses:
Programming and other direct costs 591,846 570,939
Other operating expenses 408,963 425,414
Restructuring and other expense 8,515 11,171
Depreciation and amortization 473,138 542,203
Operating income 203,265 109,799
 

Suddenlink Operating Results
(Dollars in thousands)

   
Three Months Ended June 30,
2018   2017 17
Actual Actual
Revenue:
Pay TV 268,147 274,707
Broadband 262,776 237,421
Telephony 29,864 32,938
Business services and wholesale 100,625 92,677
Advertising 18,366 18,699
Other 3,097 6,394
Total revenue 682,875 662,836
Operating expenses:
Programming and other direct costs 207,303 187,755
Other operating expenses 167,213 165,808
Restructuring and other expense 1,176 1,217
Depreciation and amortization 175,389 164,587
Operating income 131,794 143,469
 

About Altice USA

Altice USA (NYSE:ATUS) is one of the largest broadband communications
and video services providers in the United States, delivering broadband,
pay television, telephony services, proprietary content and advertising
services to approximately 4.9 million Residential and Business customers
across 21 states through its Optimum and Suddenlink brands.

_______________________________
1 i24 losses amounted to $10.7m in Q2 2018. Altice N.V.
management fee of $5.8m in Q2 2018 ($30m per annum management fee
eliminated following spin off from Altice N.V. in June 2018).
Certain Altice Technical Services US (ATS US) costs will not be
incurred in future periods following consolidation with Altice USA.
2 Operating Free Cash Flow ("OpFCF") defined here as
Adjusted EBITDA less cash capital expenditures.
3 Free Cash Flow defined here as cash flow from operating
activities less cash capital expenditures (including deductions of
cash interest, cash taxes and net changes in working capital)
4 See "Reconciliation of net income (loss) to Adjusted
EBITDA and Adjusted EBITDA less Cash Capital Expenditures" on page 9
of this release.
5 According to PC Mag, Suddenlink ranks as the #1
Residential-Direct Internet Service Provider.
6 Compared to other measured cable providers in the 2018
American Customer Satisfaction Index (ACSI) survey of customers
rating their own Internet provider's performance in Reliability of
Speed and Service Consistency.
7 The distribution excluded shares indirectly owned by
Altice NV through Neptune Holding US LP ("Holding LP").
8 i24 losses amounted to $10.7m in Q2 2018. Altice N.V.
management fee of $5.8m in Q2 2018 ($30m per annum management fee
eliminated following spin off from Altice N.V. in June 2018).
Certain Altice Technical Services US costs will not be incurred in
future periods following consolidation with Altice USA.
9 Excluding leases/other debt.
10 Amounts for 2017 have been adjusted following required
GAAP accounting standard changes to reflect the adoption of ASC 606,
Revenue from Contracts with Customers, and ASU No. 2017-07
Compensation Retirement Benefits (Topic 715)
11 Amounts for 2017 have been adjusted following required
GAAP accounting standard changes to reflect the adoption of ASC 606,
Revenue from Contracts with Customers, and ASU No. 2017-07
Compensation Retirement Benefits (Topic 715).
12 Amounts for 2017 have been adjusted following required
GAAP accounting standard changes to reflect the adoption of ASC 606,
Revenue from Contracts with Customers, and ASU No. 2017-07
Compensation Retirement Benefits (Topic 715).
13 Homes passed represents the estimated number of single
residence homes, apartments and condominium units passed by the
cable distribution network in areas serviceable without further
extending the transmission lines. In addition, it includes
commercial establishments that have connected to our cable
distribution network. For Cequel, broadband services were not
available to approximately 100 homes passed and telephony services
were not available to approximately 500 homes passed.
14 Customers represent each customer account (set up and
segregated by customer name and address), weighted equally and
counted as one customer, regardless of size, revenue generated, or
number of boxes, units, or outlets. In calculating the number of
customers, we count all customers other than inactive/disconnected
customers. Free accounts are included in the customer counts along
with all active accounts, but they are limited to a prescribed
group. Most of these accounts are also not entirely free, as they
typically generate revenue through pay-per-view or other pay
services and certain equipment fees. Free status is not granted to
regular customers as a promotion. In counting bulk Residential
customers, such as an apartment building, we count each subscribing
family unit within the building as one customer, but do not count
the master account for the entire building as a customer. We count a
bulk commercial customer, such as a hotel, as one customer, and do
not count individual room units at that hotel.
15 ARPU calculated by dividing the average monthly
revenue for the respective quarter or annual periods derived from
the sale of broadband, pay television and telephony services to
Residential customers for the respective quarter by the average
number of total Residential customers for the same period.
Historical ARPU figures have been adjusted to reflect the adoption
of the accounting standard change ASC 606, Revenue from Contracts
with Customers.
16 Excludes management fees paid to Altice N.V.
17 Amounts for 2017 have been adjusted following required
GAAP accounting standard changes to reflect the adoption of ASC 606,
Revenue from Contracts with Customers, and ASU No. 2017-07
Compensation Retirement Benefits (Topic 715)
 

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