Altice USA, in the words of one analyst, continued to “have its cake and eat it too” in the third quarter, growing revenue by 3.2% to $2.33 billion while expanding margins to 44.1%.
“It’s third-quarter earnings report makes clear that the cost-cutting story remains on track and, for the third quarter at least, with no discernible drag on growth rates,” said MoffettNathanson analyst Craig Moffett, who pondered if a Tier 2 cable acquisition is in the operator’s near future. “To be sure, their unit growth rates remain below those of their larger peers, Comcast and Charter, but not by much.”
Making its second quarterly earnings report since its highly successful IPO early in the summer, Altice USA reported losses of 33,000 pay TV customers across its two U.S. cable systems, while gaining 17,000 broadband users. Both metrics were slightly better than the 2016 comparable time period
"Altice in the U.S. continues to build momentum," said Altice USA CEO Dexter Goei, in a statement.
He noted that in Altice’s Northeast Optimum-branded markets, “we have a high amount of movers in the third quarter, and in the Suddenlink footprint, we often have quite a bit of activity in terms of university towns."
Moffett noted that since his firm initiated coverage of Altice USA in September, share prices have fallen 11.4% relative to the S&P 500.
“What else could make Altice start to work?” Moffett wondered. “Well, perhaps an acquisition? If there is a silver lining to the stresses on the industry, it is that acquirable assets have presumably gotten cheaper. Cox and Charter may be out of reach, but a smaller target—Mediacom or even Cable One, whose stock price has quietly fallen by $70 per share in recent months and who’s stock, while still overvalued, in our view, is self-evidently becoming less so—is certainly possible.”