Altice USA(ATUS) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Full year revenue declined 4.4% year-over-year, primarily due to pressure in residential and advertising businesses, and the loss of air strand revenue from the previous year [11][21] - Adjusted EBITDA decreased 12.7% year-over-year with a margin of 40.1%, reflecting revenue declines and higher operating expenses [11][21] - Free cash flow was $453 million in 2022, which would have exceeded$ 500 million without the impact of a legal settlement payment of approximately $65 million in Q4 [11][36] Business Line Data and Key Metrics Changes - Residential broadband customer net losses totaled 103,000 for 2022, with a significant improvement in Q4, reporting only 8,000 net losses [12][23] - Business services revenue declined 7.1% year-over-year, but was up 0.6% excluding air strand revenue [33] - News and advertising revenue decreased 5.5% year-over-year for the full year and down 10.8% in Q4, with political revenue not sufficient to offset market slowdown [22] Market Data and Key Metrics Changes - The company ended the year with nearly 2.2 million optimum fiber homes passed, adding just under 1 million new passings in the year [13][27] - Fiber broadband customer net additions exceeded 100,000 in the last year, with a significant increase in sales distribution channels [13][27] - The New York tri-state area showed improved trends, with fiber investments contributing positively to broadband customer additions [26] Company Strategy and Development Direction - The company aims to redefine its mission to become the connectivity provider of choice, focusing on broadband and mobile business growth [14][15] - A balanced approach to capital expenditure is planned, with a target of adding at least 900,000 fiber passings in 2023 [29] - The strategy includes enhancing customer experience, accelerating go-to-market strategies, and investing in network quality [15][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about recovery signs and emphasized the importance of disciplined strategy and capital allocation [10][21] - The company is focused on improving customer experience metrics, with significant improvements in customer care and technical support [24][25] - Management is cautious about extrapolating from one quarter's performance but remains optimistic about future growth opportunities [26] Other Important Information - Management announced several leadership changes to strengthen the executive team and drive growth [6][9] - The company successfully extended approximately 50% of its term loans due in 2025 and 2026 to 2028, improving its debt maturity profile [13][39] - The company unwound a Comcast collar position, resulting in a gross debt reduction of about$ 1.7 billion [40] Q&A Session Summary Question: Fiber plans and network upgrade strategy - Management discussed the different competitive profiles in the East and West, emphasizing a commitment to fiber expansion in the East while taking a more measured approach in the West [42][43] Question: Importance of mobile offering - Management highlighted the need for a compelling broadband and mobile offering, with plans to evolve pricing and packaging to enhance customer value [47][48] Question: Expectations for customer growth in 2023 - Management expressed optimism about returning to overall customer growth, driven by improved customer experience and branding efforts [50][52] Question: Pressure on residential ARPU - Management acknowledged the decline in ARPU and emphasized the need for a disciplined approach to pricing and customer lifetime value [67][70] Question: Business services market pressure - Management noted increased competition in the SMB market and the need to expand the product portfolio to remain competitive [78][79]