ATUS - Earnings call transcript Q2 2018

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Operator

Good afternoon. My name is Chantal and I will be your conference operator today. At this time, I would like to welcome everyone to the Altice USA Q2 2018 Results Conference Call. [Operator Instructions]. Nick Brown, Head of Investor Relations, you may begin your conference.

Nick Brown

you thank and everyone, for joining. Hello, moment, who will a we'll questions. I'll presentation, hand Charlie, and take Dexter to take then over and In you the through

Dexter disclaimer contain in with available company's that, month. to be website Goei. of pleasure please As available slides replay the forward-looking hand a it's Altice call presentation X. The my may read today's USA's over And the the on and for Page are next CEO, statements, to will the

Dexter Goei

legal everyone. Slide Hello, Why future X.X% we pertaining fees, than QX, which let Nick. included EBITDA which pre difficulty]. X.X%. Thanks, Good starting costs from in to ownership certain this items, EBITDA don't in although larger management in grew Charlie such through losses Adjusting jump activity iXX, [technical more as grew the we incurred periods, presentation quarter, accruals be on the the acquired primarily with revenue basis detail of and a with later. other growth straight in X? for into I'll X.X% these summary reported go on In won't consolidation normal which our

grow cash of the home, flow, are free over investment customer to we residential very margins bundling were revenue very on we in to right seeing report are to Suddenlink. QX. year-over-year experience mix in continue at and expected The up grow was and at trends reduce than is for good and shift better the are units improved believe we XX% pleased out we as to pace, our We improve and units favorable data continue a which and subscriber video both Optimum churn, increase and strategy

in SMB supported News saw are we as to well. enterprise XX. revenue accelerating XXXX. reiterating by X.X%, Advertising business, revenue investment business to for trends multi-screen well revenue, up guidance aX, We targeted growth such, at our advertising in is services our with our as and X% solid continuing both As growth trend X.X% positive

to shows of concert, about currently Chairman, Page revenue economic a about Altice across our our Suddenlink a sponsors Slide mobile components structure as spinoff, significant entertainment of economic shares. Altice Altice continue in but XX% breakdown shareholder the interest and On has Altice XX% completed invest retain X the the rollout we And well the total footprint XX% we where following summarized USA expanding next lastly, as XX% previously. launch USA a growth. platform, float the our voting and June which including to for the founder year. of we're Altice preparing We the new fiber as a spinoff next X stake, of in One, in the On XX% of we network the increase expanding And the The Drahi USA free from show stake. Patrick expected.

on quarter, second benefit which is service accelerate and last up normalized Our grew of year-over-year. of growth, QX we this to digits QX, Starz customer trend solid residential mid-single dispute QX. in increase in trends We half sustained further year of delayed of will underpin XX% also Business grew fully half. continues from X% this the second of Broadband with June. in price the is Optimum same to timing growth residential since the price a this year-over-year growing the segment the still from end improved storms in top saw which an the following effective growth, increase the and revenue X% still Suddenlink, multiple business acceleration expect year-over-year the the with

Lastly, up with XX.X% QX. in revenue accelerate continues to the our of growth advertising business

saw from the the unique was residential customer X% storms to total normalized of political second will in impacts of although our growth We even not growth major were In customer this our versus ARPU stable just revenue year-over-year in seasonality QX losses the seen was normal $XXX 'XX year additional in a in net X,XXX the a to QX Optimum with XX,XXX USA of trends And at as Altice BXC overall QX line shows X%. and Slide tailwind I QX faster in residential in advertising, Starz relationships mentioned, Suddenlink residential results. and as which performance X last here have with the expect following reflecting QX. grow residential contributing half in factor base QX, unique we year-over-year. minus better customer

on focused broadband Altice residential through One very experience. tiers remain will the ARPU speed higher We growing and

driven Optimum and in due event help normally in the X,XXX we normally you haven't video additions even by Recall XXXX performance with seasonally QX XX,XXX the will seasonally weaker year because Slide net year. pay a trends fully the quarter overall We of is Altice improved towns see university normalizing. XXXX, additions XQ, had XQ better to We also last to here Again XX,XXX than second net can One above were is QX. though in its weaker X, exposure QX broadband for Optimum improvements QX Suddenlink. Suddenlink versus in last the trends at half. second whereas XX,XXX in rate Suddenlink deployed TV expect quarter with Altice for running losses USA's

initiatives of by pushing at start Slide January available which Let's start update of This of Optimum year. One half of been move existing since we performance promoting the supported X. with lots this more like aggressively and features Altice footprint a second One, point of has in operating system now satisfaction on on new the We're be DVR. with will throughout to terms will Altice further customer customers XXXX. the the a will migration out-of-home during and Starting our growth where

and and us. on services mobile, available to Suddenlink Altice we have We are straight which better Recall across those which a for full attractive features footprint away. has next during LTE further we're expanding and economics track year support the rollout markets. QX, XG infrastructure-based MVNO, have in trends flexibility voice-over-LTE launch On should will

team dedicated experienced which and management development, ongoing the launch and mobile a strategy. lead have We mobile will

In of upgrades with development and schedule terms AirStrand is network the network. our ahead the we're as deployment are densification which of of our helping Sprint's expansion comfortably to of network, WiFi

We are also gigahertz complementary with good a in us. equipment X.X band testing CBRS this spectrum be may capacity as for

move Slide X. Let's to

growth facilitating broadband significant in network flow. usage, our which driving of Our base, increases is revenue customer the and various cash upgrades are broadband

money in IP to networks of rolling FTTH as as upgrade These First, digitization our following IP DOCSIS run out availability us penetration services over optimal we allow for the X and parallel. broadband us of the to being well new extend migration will as are gigabit costing new well services fiber QAM without to constraints network doing less time. a as network, our multi-device

in of in this than WiFi differentiates competitive the boost will gigabits the smart This end WiFi which enhance us also will puts With the us more possible. fiber be industry a year, strong of and by coverage further. service speed network, truly the the and XX quality position. We're launching of

all fixed really in being the MVNO allow future see of across full for a our converged seamless is to new market. services, is networks every wireless way constructed which our we Lastly,

data up usage an devices, with is are XXX of average. as XX% gigs download megabits Using month, in-home of our year-over-year, of up over per patterns, speed which taking year-over-year. on average XX% of XXX customers XX which In is terms QX, connected

month customers take XX of proliferation the quality To almost of in-home terabyte no streaming support these highest you leading it new fixed usage are a services, consuming ours. X are our mainly which patterns, and using, requires of with like There by XX% is driven If average, OTT indicator, network video per data top the data devices. as they connected a on substitute. high

they are Over fiber do And cash a to our expect from using basis of For throttling which operators well XX% unless at going mobile do mobile plans called Charlie we packages. operators in we today, business customers as not or on for not start example, scaled per the a per capacity Altice capping over bundling to gigs review. so and month unlimited is to through the will of have over over usage right our platform services data financial gigs from data customers match make new dense XX so the XXX positive video now, the for and perfect broadband-centric with build as One US forward, hand us to now of significantly network. reaggregate video flow OTT And margins I'll the will month. now

Charlie Stewart

basis, quarter On cash see ahead EBITDA peers. we that Dexter, at a which Slide in flow of you at where XX.X% EBITDA margin less operating hello, or our Altice can with everyone. CapEx, and XX is XX.X% on margins reported the we USA's summarize believe adjusted Thanks, were free meaningfully margin the we largest

onwards. from iXX transfer to of the third will following in last relevant June, as the the in which year. from second started which in the that of of our second million the includes Altice Technical second the Separately, Altice performance even we USA Services legal XXXX. of consolidating million no Altice the channel certain the periods, in another though quarter, confident in realize million that didn't quarter not On note it's Cablevision matter distribute spinoff. normal longer there we'll with we're the the costs claims we'll spinoff of lastly, acquisition larger remember settlements also relates not US However, connection losses iXX, major that accruals, N.V., future and Those EBITDA well financial $XX management quarter, the business quarter to so the to impact had as than USA we just which have of channel we our the incurred to of $XX be And the we pays are in our we following to that US, lawsuits following which improve fees MVPD continue Suddenlink. acquisition, completed to just pre-dating Altice of up signed had only annual which $X.X in

items, margin the year-over-year quarter, been XX.X% an of million margin would free So an at excluding our of which all growing have EBITDA and operating flow $XX and cash EBITDA those represent XX.X%. X.X% would higher in

forward. expenses video still to guiding single-digit expect year-over-year. That's we're going grew customer, customer here per programming X.X% the high and per increases total Our in quarter X.X%

we flow. be year-over-year. our $XXX of cash half, that expenditures, rest well On growth the capital lastly, the CapEx $XXX As quarter second costs new Slide also a and an generated higher which last rollouts we overview free underlying million revenue of this million relates the and, expect the rest rollout we in second Altice expect as In $XXX from of of throughout acceleration will of after that's which up increased that for fiber margins can show in to the year. XX, second our higher builds. MVNO the to the show and see we million flow, restructuring year. home XXXX million an cash we of cash XX, On of of One free is as the network XX% expansion Slide view $XX of cash you quarter

also also the quarter. in Financing expected payer the higher a was million the reform, our paid in So change not timing the of And interest spinoff. coupon cash million. tax was than activities and year-to-date total which as There second capitalization second just in XXXX. the significant pre-IPO, reminder, cash a was last payment tax normally a dividend, cash lower Altice prior the interest we've $X And $X.X usual the that until we due that costs we following the cash and share no fourth June. because reflect payments, $XXX $XX year-over-year in but note payment I the which does would immediately be generated the quarters Recall loan had of shareholder is in of year. billion following the to USA lower quarter. of to tax of have meant spinoff are to authorization a buybacks is for billion M&A

maintain the right, Slide leverage On down from deleveraging a USA's within to when We cash guidance, Slide we of years, of dividend. that our reiterating acquisitions. debt cash from we're Suddenlink flow and as last major has until free as flow credit on times trailing a the leverage then end include on range so pro weighted Optimum further XXXX the quarter quarter can our maturities liquidity quarter. hadn't as starting second the Optimum XX be generation. position revolving even paid Optimum. EBITDA point numbers to Suddenlink basis, The month would target a X.X $X.X basis Slide be for end If was facility of average come XXXX growth, well X.X to strong of weighted leverage and X.X%. our the which is summary a forma to billion, of the our see XXXX, Altice got our the XX our times. reported you draw any closed share well opportunities any X.X into are full additional account of intend And course, already Those at cost cash of of as shareholder in is the X.X We today. we've we our our billion we recent by have potential taking as, On XX, term X leverage revolver $X.X a times we just see maturities rapidly repurchases. free at still high at repayment near year range the returns. finish for average as year times second no XX X X.X annualized a covered by debt to of and And two our current on of and maturity life that, for profile at is debt maturity

we've approximately to We CapEx expect X.X% to be acceleration half, further in in XXXX. X% billion second growth we of just approximately expect we total revenue as XXXX expect and annual still the and $X.X outlined, compared to

EBITDA EBITDA back margin Altice to very margins or the with and we And further flow generation that, Over of with free an strong line expect USA's including cash it XXXX Dexter the expansion long-term, expansion medium in I'll this year. flow turn for cash still adjusted Q&A. of open to

Operator

Instructions]. [Operator

comes Cusick Morgan. from question Philip JP first with Your

open. is line Your

Philip Cusick

A couple can. if I

second that or as you you at trailing to early talk last talk of are, the learnings can And months second, First, the end the rollout; are? leverage buyback the quarters what the about the think times that the remind you about nothing And about more is two us quarter. then what Is fiber annualized? us where year. in calculation XX five

Dexter Goei

Sure.

rollout the progressing listen, well. fiber On we're

rollout pains As process the we've Fiber-to-the-Home we've Optimum highlighted the permitting quarters, past now a few footprint. we good by nice, than fiber really up running took on that expected. had getting and the in in driven nicely But teething we're longer out the rolling

cabled for XXX,XXX homes over We and XXX,XXX have over ready homes. today service

rest and accelerate of year into to XXXX. those continue will We nicely throughout the this

amongst we We launched small - in a have beta tested of subset have service. employees for our and already are already already it soft certain where ready areas homes

we on for a quarter. offering So we've commercial launching QX, in as last in are track stated

know want. gigs the technically, I ready if or the modems' to but have. we to NG-PONX And do on on to day It's X be effectively up can XX upgrade gig GPON-based, it. about want an we're we we X.X is it that based excited a that extent to either XGS-GPON, to, we gigs So going capacity

architecture investment flexible XX to can we our if be clients or shortly. want that gig ready necessity us to very very and a is of this make for we the So so

had back flow stop whether didn't Regarding around the the right given buy trading back then could approximately and there shares. we period not any has really spin think us understand We the our or need when days that had to the post sprint all blackout of for didn't buybacks, stock pre-spin. particularly fact we out the occurred movements the before technical XX gate and our occurred was we

fortuitous been lucky anyways. is it really to we off or relatively, be slightly the prudent that where on it would prescient wait. relative guess, the thought more was spin We've So or to I stock

there. cost we haven't lost opportunity So any

we right other. target, LXQA it, how In five about today months XX times the listen, X.X line each of to our and terms last think are in with

make going of As I we're where and the to earnings XXXX. you really dentures the going we third about this quarter flow increase where quarter off mentioned very expect our think the our into we and are into flow based that's confidence a of, We LXQA on get QX call. good the feel to our judgment year cash as [ph] our on year, cash free fourth based in free call generation

and make we we disparity start or and And judgment at into time. get call at deliver LXQA looking I QX expect as LTM we that think to point in so we'll the QX between deliver, and and that

Philip Cusick

Got it. That's helpful. Thank you.

Operator

Your line next of Goldman question from the Brett with comes Feldman Sachs.

Your line is open.

Brett Feldman

in stock making anticipate the for during script in your around a judgment shares any the a it a judgment is determining at buy that that it half? the Is just And call fair? call like, talking repurchasing sounded back buybacks judgment about whether when of clarifying, the is to be second it's you're from your way right to as what or to do all sake you'll comments leverage going you the assess half. you're Because when back probable call,

Dexter Goei

Yes.

that more basis XXXX given being into I just even that's that buying highly think about Phil It's back price deleveraging is that we back. going buying to are push thoughtful comfort levels. it's The and more shares. LXQA much level we I we the fair, can much we answered because towards a know how do opportunistic be question is what Brett. And we're we on we're probable feel

Brett Feldman

Got it, okay.

that hear Can margin level ask So you out in, maybe costs get year. additional of the you you're anything of the us that half flip of the a saving improved second drive revenue trajectory. have You've some operating me a prep And about other you the side then think then expect the the at Are in to we a let that done model coming on that back Obviously to off business? MVNO? to business. leverage be the to the to in margins question half? was the It are costs is come that, through going can there factors of on costs. walk going job you great there great higher

Dexter Goei

So think about mean these on the further cost I we've themes talked regularly. I reductions, are that

out the go continue the kicking we'll rest accelerate will seeing continue of business. integration There we position and on of and October year, there. this the got cost start coming OpEx of reduction. As for work be migration, efficient BSS/OSS geographies in which got We've start year which to the we CapEx customer costs on. to thoughtful through Fiber-to-the-Home, off We've facilities to are that issues focused terms of related a we about will our of trying allocation very XXXX in terms of care capital large with in us nicely that terms being in

those period of all in some, things, and of short and improvement further want super our drive then a in don't be now between margins. very I year end. to continue to time specific So

got seeing is six launch, a We acceleration make around obviously being we're going the ourselves from are specific the we've leverage operating of positioning improved lot going price the half great we're margins market got probably that given so months the the many in clearly to the increase, very the a doesn't the iXX, and really that of middle MVNO to But inherited the we've second projects sense EBITDA for air, other for the EBITDA. But we've XXXX. drive ad of next year. already up in

Brett Feldman

for Thanks color. the Great.

Operator

Your MoffettNathanson. comes from next Moffett question Craig with

is line open. Your

Craig Moffett

they particularly for think talk to Or of Is dynamics? for market while is just in continue you've if could been broadband sort primarily that business grow that relatively in seen fully runway legacy given a are to and the that pricing now Cablevision you the Dexter, story just a about growth be I already. going a you the units? penetrated wonder where how territories the you can

Dexter Goei

think in in more roll and and going grow continue to a in upgrades and price listen, usage back think levels. places where to momentum at given standpoint, going Well speed we're products Optimum opportunities upselling continued Clearly, potentially we're footprint continue we penetration better seeing share what to units push we very of the take out have have competitive areas. momentum, standpoint good with better from I we're data to have Fiber-to-the-Home the I to market

QX think revenue aside businesses. on And growth shape form, in abating see so that where in in the I the any seen about numbers or you've side Optimum We XX% putting on that our we're data. don't seasonality

both anything that overall slowing data nor momentum over not So Suddenlink. seeing Optimum our something at down of where at in of is we're terms our businesses

Craig Moffett

in seen particularly, posture you if have Verizon the And any of again, Optimum footprint? competitive FiOS in changes the

Dexter Goei

the we I listen, Obviously strike years. as and No. our impact of first their of in impact their the previous we pockets. mean Starz see they taken in advantage advantage took had impact, Univision quarter

as of focused putting are that some abnormal anything we're cases, retention both So that very of time, very think organizations and super were be I times in abnormal the seeing for per our nothing that in certain the are But quarter very they se post had their There periods short blips customers. aside, not of also specific when our behavior. promotional Starz may on are very we first focused storms. the we to

Craig Moffett

you. Thank helpful. That's

Operator

from the comes of Jason Your Bazinet Citi. with next question line

Your open. line is

Jason Bazinet

you can cable just at And to levered in trading very run number that the taxed way, flow your cash companies model that nervous was thing share terms your and flow. negative market did is is that whatever sort you're looking my given times year free of the peer for Europe. doing, will me top stock infer this seems into the trade. the I I Altice And per issues where implies unusual in that ramifications of XX cash below fully just like and have only is you very line my

the of that second you the the spend there talk just on and be a Europe anxiety what and about buy side? are out similarities might moderate differences and US can between the that might So some

Dexter Goei

never before, I'll guess answer. but I've that heard I an question repeat

markets, fully the end-to-end the probably three best on have have US between wholesale is are, in operate markets European fixed a converged the basis national four that on in both market infrastructure are, infrastructure are ownership which either and we wireless, are wholesale you promotional unbelievable three specific, player there players in that activity. from those on players where answer players, markets no on we driving and where think European regulated a for or we or the wireless the - To I an These been on very basis. basis market. one, similarities be fixed

have in fact regulated the over money footprints promotional larger there and highly ability someone's and you existing side with very We on you activity where in business in do to start trends that those aggressive a players wholesale in infrastructure a market any balance in or a be in so France, market And the back infrastructure the very the for smaller with to market today. driven also of just has of simply sheets up our nor of little no bit see see shape any form Israel. not Portugal aggressive this any any do building of on is BXC unbelievable

market? when type dynamics of off don't are regulatory Fiber-to-the-Home, market. we the are Altice has has continued versus on really white only you the black have program. the that and kind doing on; comment that based aside, The damage dynamics that, the competitive way of Fiber-to-the-Home things that of could a in announced really you Putting way So understand a been Altice MVPD the which we we

has gone the to We infrastructure facilities only so and have we're MVPD in a mobile our based MVNO own that based do MVNO. invested ahead facilities a

user do communications the to has And aggressively recent who is going are two that, an years. in in has enhance going home integrating public who another the the that over platform to and clutter boxes. by eliminating in the MVPD only invested thing. we We was two platform an I years only acquisitions Altice guess the was the that. significantly thing MVPD top one experience set-top One of advertising Doing all-in-one reduce On are and

and efficiencies busy, replacing been to in and been take us all but we our business better been it superfluous, zero and infrastructure, heavily at have costs yes, really of our and the of places also systems, have where out the able to we've a advantage not taking it's investing with our game which given sum out processes, not services. negative our be were they costs IT drive in the capacity and, So

hope But more I want. or question. of a So be specific to if question of you happy that answers your your all portion

Jason Bazinet

No, it That's does. very Thank helpful. you.

Operator

question Your with line James the comes of from next ISI. Ratcliffe Evercore

is open. Your line

James Ratcliffe

if could. Two I

on thus US compares course far you've and to you've global First to increase that the last a of the price assets. the or to buy any of over couple major on And seen got cycles? all, how content the content previous in trying color the buying month strategy, response MVPDs secondly,

that's ownership? in saying in really RSNs. helps Charter are What's got thinking subscribership, interested they maybe in fit You've iXX your local only does particular news content content with or that? local and drive them like how on And

Dexter Goei

that we a expecting was first quarter, which On the thought in were in price increases, anticipated effect at least of price I think we spoke about we our XX% it terms increase. of retention our where the

expectations. we in better as planned, are that price the it, think our let's terms increase call than doing I as in so it's now going of of

to a fantastic business, and there we into is fourth with quarter the Relating So been just content in News of content diversify third and news trajectory hang year. bit. of and we feel providers good going certain on a which XX. programming very We've business work invest strategy, business, the that the things our a to it this improve off of able and to inherited forward little revenue the as to other that hyper-local platform

We've in on expected seen the a years but a US been that seen for has stickiness of part has on the and last off the very viewership, of accelerated kicked on traction have US, in good overseas, performance here February better three traction now carriage. viewers here the existent platform to We iXX and better get than continues

portfolio that many in whether today. on a that that the And, as in any managed during Europe in be news is arguably, just like economics production, we've we probably onwards. simple, those not can something entertainment, opposed the better between we'll of be not Altice is the will balance the businesses Listen, We We case part lastly, that the MVPD Altice to outside think to you for really not have what here of speaking, maybe which our iXX. in incorporated And strategy to many are attractive do model content XXXX core separate general we're something some RSN, keeping which cautiously portfolio, we is it pieces. our that large your per we investment the to opportunity where year, businesses, is up the our why we pertains this N.V.'s of XXXX, as have it is drive and into And the that in of going distributors We've strategy other albeit able business of there optimistic real think think US, coverage and content of is have in don't maybe interested news. synergies that as other se, on signed the that frankly which forward; out take its two hyper-localness. the the don't we portfolio. would That today. clearly business there, very to that's is US but part we two another recently original in content not advantage stuff national significant add us for iXX, are really which iXX taken

James Ratcliffe

you. Thank

Operator

of Street New from comes line with Chaplin Jonathan the question next Your Research.

open. is line Your

Jonathan Chaplin

a people something us us if where you're is line where on. that a rate through you up wondering I'm there to you if what prices process? product context taking Or function it around give the products are little bit discounts is of can going ARPU video just bundles? wondering remind then go coming the giving And increase, you specifically transition I'm pressure is skinny on CVCs, else of you're down the subs impacting spinning that Or Is as from. line? can

Dexter Goei

it's doing of in we by line, or boxes have re-trans A the listen, question converging offer slightly There offer the preparation BSS/OSS across of business by base of an has for line comes across surcharges. above onto fees different increase it. No have, so a new sports Suddenlink look which that it is BSS/OSS management is about to increases migration. X,XXX issues; a There from in and it to each lot states base. increases that certain launch because of your residential higher a on entire able the on set-top allows no XXX platform, across we we'll premium to terms take to on helped been we've answer related where, to base customer one the good we're people stuff the by when migration at where in our is about we do X% the a coming literally to bunch side, average, price offers been us where our big down to migration BSS/OSS package

packages costs. So people migrate that is as we to the increases driving some at better of slightly price higher

you in at really mix. the some terms what mentioned. in we've the In at retention numbers quarter, units, is to types to the we're the downgrading ARPU you we pressure with you is there. overall as and things relative a to we think we is saw manage And up of the video our churn. to as of and about what ARPU, performed of But customer different really which can on packages. overall, video them, increase. video about continues base, ARPU RGUs, terms continue the the it's look see, overall some as and onboarding But it's context There there's our spot-on last mixing of Optimum, year through all some second in There is

Jonathan Chaplin

So, if just I up follow could Dexter, there.

Given X% you price in that to think business? in video that on you'll to increase ARPU the how CVC able do be much of in Optimum, on hang pressures

Dexter Goei

probably right next overall, so I I time me most we could side to to relates next shape or the this price one you video offline form the see granularity take increases the chat here we video But in about don't and know, it. the have it. you of of on could

we it, talk we're a of planning of if to plus be plus on So as side. retention video the it feel XX% going retaining when about we to XX%

Jonathan Chaplin

really that's helpful. Got it. Thanks

Operator

next Bank. with line Kraft the question Bryan of Your from comes Deutsche

is line Your open.

Bryan Kraft

can would the to million I also whole. I think, And depends quickly second half confirm from costs an in of then year, the I I mentioned on the us you to you confirm Dexter, $XX and a you second iXX one-time color two even signed XXXX already and up. just start comment thing I are think iXX get in the the they'd expect of How base? and costs for just legal reported the as said are guess of half you've revenue things. much on know, to that said versus as the ask it adjusted iXX breakeven wanted get, I would Or curious to is you just on the quickly you in to generate they contracts when other on the that but just just consolidation. those some you opposed of on ramps how revenue. how increase distribution if increase that about margins, increase to wanted basis now sequential the part Charlie, had that I called year-over-year also And any you meant cost actually you give or basis. wanted that out on the to you costs

Charlie Stewart

Hey, Charlie. Bryan. It's

generally but, the as The that mentioned yes. fact, year. We predict second that, expect have which variety unusual on So so be is he of behind yes in two to price we story the in certainly the accruals things doesn't didn't quarter, think was can in beyond working happens event. it certainly I think answer it year-over-year, that to but had the it the driving. called that margins legal previous also out the year-over-year really we're something that flat a as somewhat a questions It drives your tell basis. we expand in increase is expectation on an $XX there's true enhancement is naturally little a margin million the and all of well year. different mentioned Dexter on margin looks are quarter, half I we reason the is because tricky unusual, sometimes There's given the That margins that because the factors like second and but that a

then some really naturally that that. in ATS that iXX, numbers things and consolidation lastly, had we've will not in were cost function were those our only of of that and bought that reduce third the and of quarter in cost a first it's And the in base the recurring quarter as second the it we are not Secondly, in the April, those fees the given management last were year. quarter

those that expect business looking for because and going that And think drive things million out ahead. the million still reason. we it's mean quickly a about about called effectively, forward. periods in I specifically that Certainly is I of in so in losses $XX just iXX. specifically we asked than So well we're you better to $XX iXX-related. but breakeven, growing the But to it obviously startup, not that is

other The we the third effectively in things I million, the recur things quarters. don't the and is legal expect to and $XX which are fees mentioned, that fourth

Bryan Kraft

very helpful. That's Okay, Charlie. thanks

Operator

Macquarie. line of comes from Amy Yong with the Your question next

Your open. line is

Amy Yong

to update come probably will rollout, over operational the I was then also budget for the and normalizes? fiber CapEx down you curve IP. it as talk the us your as about wondering your talk and spending rollout, if And and of can could gain you maybe on how migration about efficiencies you time CapEx

Charlie Stewart

certainly $X.X range, our Sure. spending with fiber and Charlie. always comfortable We've It's billion, CapEx $X.XX billion this talked in we're that, build. including about our

specific on given any MVNO haven't the We yet. guidance

already towards say uptick quarters launch, levels next you've CapEx year spending you we'll to CapEx event for first that, got. really And you invest a sense as well spending to can up for but all begun fiber As intents One. in more our the the a that's seen incremental tick move to and purposes. few about give in as the have we that we've Altice we the the especially, as in look And at

in as as our not so and to operating the being project right fiber see on, but pass, as comes efficiency absolutely and and that new really well You're as that we in just benefit products bring around of also experience expressed capital especially we expenses. customer

started already incremental those as cost CapEx will these materialize will into come So said, if absolutely that's those build realize we at, We've quarters, we're online investments. not what for. you'll the over multi-year our meaningfully it's year, talked a lower levels next our And were shooting that fiber those gradually can we it's we as trend you I that in as see look so think several savings. about but and that certainly not last before a customers play come investment

Amy Yong

you. Thank

Operator

of line Your next Kannan Barclays. the question with from Venkateshwar comes

open. is line Your

Charlie Stewart

something. the to afterwards. back Perhaps we next to we or go Maybe issue mute have a can Kannan come and question

Kannan Venkateshwar

Hello?

Charlie Stewart

go. we there Oh,

Kannan Venkateshwar

Sorry about that.

pricing. So the states across - on the flows demographics how or question about the was how and reflects different that more through that

perspective. So you base Optimum within from different and have demographics a very Suddenlink a

as different? across these And behavior different two tell you that long-term pricing So bases? about has been increases, these power the you've taken price what more does

Dexter Goei

marketing and base. the overall are pretty our similar Altice entire approach offers across Well USA

at and now So every little Optimum particularly and certain Suddenlink different a regions virtually if you our then and for Single on be side. offers our at save at data look Triples identical, may Suddenlink, they're the

take terms over Optimum a less to of continue see it at obviously we really which lot gross of a levels. So video in our ARPU at sell-in just then to XX% the a material it's in becomes the mix. Obviously adds XX% drives Suddenlink, difference and

know on our to sell average terms those your when higher So average we Play if focused of but if things side trying answers I because look gross really they question, and mathematical Play than actually Triple are types features someone very Optimum penetration as the you don't prices at Suddenlink to the of all adds. are that it's add Triple our in in sell-in at on actually on prices on our video and when the in you various Suddenlink, grow

Kannan Venkateshwar

Thank you.

Operator

Stanley. with Your Morgan next Ben from question comes Swinburne the

line is open. Your

Ben Swinburne

and about shifting accelerate the business timing. strategy a is Maybe, us at of remind Particularly the as that I'm opportunity $XX good And which wondering relief a opportunity the an half, has to talk wondering over that just million you mature Or seasonal growth for in about if get there. run a management where on you the the sort Dexter, contribution And fee been Lightning helpful. going pretty that if could QX more Optimum, just business is inherited business, that to BXB, back you of any is half of iXX so, kind back could Charlie, be are we I'm comment think if for while, but would and, of see just if a guys to you really you bigger? rate?

Dexter Goei

to as Well Ben, you. and It's opposed I'll correct Lightpath just side, Lightning. on the BXB

Although I do like the Lightning.

Ben Swinburne

Oh, sorry. have should been It Lightning.

Dexter Goei

revenue $XXX million that So revenue minus that Today, was CapEx. doing to to growth around probably about was CapEx. X% business EBITDA of and about does X% EBITDA and $XXX business $XXX X.X% of growth we inherited about million doing a million minus

thoughtful So where we drive and growth. have been about better we CapEx being very focused that business invest our revenue to right-sizing on

could and hasn't escaped amount for of BXC on that top MVPDs whole it free out growing relative investors and strategy to infrastructure cash value be about worth there today. us to over a flow, above a what are focused think traditional us is world of which very driving Now that EBITDA there line significant a are

the achieve way money. third to incremental a about trying are for. It's business about that's the of It's a not we a really parties It's want to CapEx thinking where in also like what's we best just lot that. is we of thoughts that lot. so a do like business more throes that to it And and lot. spend what are a But we that

about in our radar think time, that on all stuff we'll but due So screen. it's

Charlie Stewart

is The as now. What for of line. extension, but what about million, in bad top distribution million rate and really quarter by a $XX this the drives us we're audience really then You extension, that's is, and, ramping base is cost And by that the iXX, profitability, that and, asked there. the run we about Ben. really drives changes kind $XX talked not it

by bought the critical in seeing encouraged as delivering place. business component, we're opportunity, first which if very the see most what we is we're why an absolute that in that area. the So US to critical we component, the And not

as direction and we it. ramp So apprised it driving in we'll you of we're that keep

Ben Swinburne

on Anything management fees for the.

Charlie Stewart

Oh, sorry.

half now million it year have the we that so asked that. a won't Yes had so year. last $X.X that And a was year $XX quarter. $XX million would of the million in You about we back year that's this

Dexter Goei

turning we're can profitable This shareholders we And business. is a shape think a any for in we drive on into that on Ben, forward. any project focused iXX, that value This is very good business form. or not just of something going

Ben Swinburne

Makes sense. Thanks a lot.

Operator

Your with Research. Matthew Buckingham from next question comes Harrigan

open. is line Your

Matthew Harrigan

questions. two Actually,

work your approach your Firstly, and the peers topology and LTE Charter in CableLabs you've you're things taking than a a a MVNO ability bandwidth I like any on think new with constraints different on Cisco Comcast there to pretty network even Sprint. got different partner Is reports over DOCSIS and has interesting. it's

IP but that you. to would of get permitting must on regulators little happening that secondly, New at there? like XX to going Some expected, upgrades it. anything there in up business guess some anything then And in much just to picking as not Charter's the days, You York is on pleased I said going to inherent probably slower that DOCSIS New Is with there other cause But the some issues you the pretty than fiber a process side? operators migrating it. think was least as be I regulatory aggressive looking with you'd be of QAM are the the you're that's York at

Dexter Goei

Yes.

two only I have two generically, on but not MVNO side, think, MNO we listen approaches two we have different here. on partners, different the

it difficult is We MVNO, cooperate around know, clearly a acquisition which and we've based. maybe we marketing, today makes infrastructure. Theirs are specifically stuff. bit can it so a supplier or some as little a around whether But a active Ours as you to cross-marketing, group historically cooperate facility be globally is light of key I the of friends our from this a the ever relationships our that. attractiveness or on and good own. anything and on go been But the able with do eliminate global ahead Comcast on stuff very teaming lot to to suppliers relating maintained up with don't level Charter possibilities that we've a

out line the mean we cooperate. to relative left to have off-base regards them. so slightly to to their want do. with they want infrastructure, doesn't I by they in our have think Comcast we That what friends that relative some fiber They and, Fiber-to-the-Home rolled instances, some think want way, I go don't fixed lot many And of veered I a in realized to don't we're to footprints. from deeper know in

to the there's focused veer in York. would I a over cost Optimum and they network attractive closer to where on the we're New get density side, here why the heading the reason if on side most think aerial very they given on we're that. towards levels that points footprint And were able likely

communities. do Now has permitting has processes on regulator. the state with the It to it do the permitting of process, local everything to with the nothing

so to community-by-community is a that do. exercise just bootstrapping have we And

Some get We those approaches Others helpful.” immediately use are do the more just do to fantastic. and to - communities say, is want and joke discussions everything are bit little a want we “This other to be difficult to and can we timely. what

well-equipped how many can terms permitting shades of we nicely we're homes the and half grey going be of along this in in service. will there's XXXX ambitious everywhere And of ready second And so are different imagine the process. I think to in-tune for be accelerate year. to you But

Matthew Harrigan

level. And with then you it, have state no concerns, the I take

Dexter Goei

No.

condition, Obviously homes that with bunch have a level. do speeds merger at which build. to of and of have We some upgraded our primarily concerns elements state we regulatory part zero were the had new

on XX closing our our two of schedule have that, ahead issues actually, been some That stuff as those And so the schedule met do broadband are did we related had of that any before which the of related no never network. commitments, clearly the biggest a of of other needed well. regulatory low income commitment four by of we on have relating deal did to we that of with the we upgrading a October, has we had our transaction stuff had to months long employment on months the ahead stuff. all We and under And already, months everything shot to are ahead customer closing transaction some build have as us. We after personnel. we And into we Outside with little technically issues that on maintenance new of them secondly, to. were well. an facing merger we with are issue and

Matthew Harrigan

Dexter. Thanks

Operator

comes Your Doug next from Mitchelson Credit with Suisse. question

is Your line open.

Brian Russo

Russo Brian the questions. is This for on Doug. One strategy. mobile Two

what growing if can with going to And you've little for less, offering the richer resemble, be got investments require to talk bundles. to it to about broadband to bit to more these look do advertising more I going your Just you get bundled the offerings thinking or And focus on go-to-market take on question your sense least curious about you are like. One from are product? Is on as of what seen you what thoughts it is couple need wanted the they things with a or you're at products a we've you kind and business? in going that? just given of is second Or offer skinny a video. Altice and Do video to the make preferring kind Comcast?

Dexter Goei

we're to I closer is So to a of standalone a those I most on going we I that in different this discuss have launch. are - to strategies to profitable but we're of do want whole not host to think, The business. a jest, important strategies. lot make that think think mobile, There considering our this

to So capital handsets terms how to not money are on may lose in we money, and There operation, year to working of timing going but even lose relative losing of this. be in first those, don't anticipate, our differences money. we treat we

choice different with potentially us new whether focused something on your your going offering or clients customers friends do I the Relating clients So want. And the to think think unclear in our offerings. in Charter our and I Comcast question, skinnier MNOs what have clients customers. I for how many do versus treat we're doing. at more some the done video, we're what of to our question follow existing And want yet think we over our want of tune point I color our whole to is, are of or and what think

our And Altice a on so third already party's absolutely whether branded on offering open that's we Altice us And or are have platform. we Altice us One to our bundle platform, both. skinny One providing a bundle Netflix

ones, MVPDs may imagine, them discussions platform. in the there, the our onboarding out One virtual larger we're about onto As you all with Altice

but to margin and continue experience, dollars first will key customer a experience, we're which reduce whole to, want able making enhance to focused offer service we Where attractive the is a ultimate So go sure the customer gross what our platform. the stickiness in care, on drive to primarily drive clients obviously good very we churn. are

Brian Russo

EBITDA Understood. side. a on thinking basis If or EBITDA to CapEx both? follow-up lose mobile that ask expect we don't or you about I basis When could on just an say be an should money, the less you

Dexter Goei

handsets some is I think really lumpiness given everything accounting - putting outlay, issue, there's is CapEx that. much. our aside, safer very and not EBITDA don't in an to probably say But I which

on EBITDA I losing So anticipate an money minus basis would not CapEx either.

Brian Russo

that. Appreciate Perfect.

Operator

of last Your the question Nispel Markets. line Capital from KeyBanc with Brandon comes

Brandon Nispel

targeting the effect broadly to Can it of was maybe and year I this more rollout the us remind accelerated you're something the says terms expansion of you what next in household the passings in in release network years? new over several of wondering, press Suddenlink footprint.

Dexter Goei

the years on that last it's so us kept think the our integration of business. I mean several the extension much have not exact the focused clear of I and on part business Yes. footprint of integration

priority year going we so half into the of in second XXXX. made And this have that a

done last about talked what terms the about extensions; Suddenlink side. in Optimum we've Suddenlink two publicly side between of haven't XX,XXX about in Optimum and we're years in the to going We and likewise the in Historically do. XX,XXX

to we'd pinpoint expect that. I to a XXXX higher to in be you. want than think I number don't

that higher for going be 'XX we're number I seen at which publicly about think And will and 'XX. point 'XX, more we really in think talk we'll than what be I a XXXX, we've it think in ready to significantly in time.

Brandon Nispel

Thanks for taking the question.

Operator

back now turn closing over the for company will the to I call remarks.

Nick Brown

Do questions. we let look in follow-up you few weeks. you us to next you. joining. have Otherwise, the know you Thank seeing Thank forward for if

Operator

This call. concludes today's conference

You disconnect. may now

Altice USA (ATUS) 5 Aug 182018 Q2 Earnings call transcript