Altice USA(ATUS) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q4 2025 declined by 2.3% year-over-year, with full year revenue at approximately $8.6 billion [4][9] - Adjusted EBITDA grew nearly 8% year-over-year to just over $900 million, marking the first quarter of year-over-year adjusted EBITDA growth in 16 quarters [6][24] - Adjusted EBITDA margin expanded to over 41%, up 380 basis points year-over-year, while gross margin reached approximately 70%, up 180 basis points [6][24] Business Line Data and Key Metrics Changes - Broadband subscriber results showed a net loss of 62,000 subscribers in Q4, ending the year with 4.2 million broadband subscribers [17] - Fiber customer accounts grew by 33% year-over-year, reaching 716,000, with 12,000 net additions in Q4 [17][18] - Mobile lines reached 623,000, representing 35% year-over-year growth, with a net addition of 38,000 lines in Q4 [18] - Video subscribers decreased by 13% year-over-year, with a net loss of 49,000 in Q4, although this was the lowest quarterly loss in over five years [20] Market Data and Key Metrics Changes - Connectivity and all other revenue grew by 2% year-over-year, supported by mobile revenue growth of over 40% and business services growth of over 8% [22] - Residential ARPU grew by 0.4% to $134.49, with broadband ARPU increasing by 2.8% year-over-year to $76.71, the highest in 14 quarters [23][24] Company Strategy and Development Direction - The company is focused on simplifying operations to enhance customer and employee experiences, with priorities including improving broadband trajectory and maintaining financial discipline [10][11] - Investments in AI and automation are being leveraged to improve operational efficiency and customer service [12][13] - The company aims to balance capital expenditures with long-term economics, emphasizing fiber expansion and targeted network upgrades [15][16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the hypercompetitive environment and emphasized the importance of disciplined execution and operational improvements made in 2025 to support long-term EBITDA stability [40][41] - The company is optimistic about its ability to improve broadband trends and customer retention through new pricing and product strategies [38][39] Other Important Information - Cash capital expenditures for the full year totaled approximately $1.3 billion, with a capital intensity of less than 16%, the most efficient in the last four years [27][28] - Lightpath revenue reached $468 million in 2025, representing 13% growth year-over-year, driven by demand from hyperscale customers [29] Q&A Session Summary Question: Update on broadband subscribers and expectations for 2026 - Management noted that Q4 faced unprecedented competitive pressures but emphasized foundational work done in 2025 to improve market positioning and customer experience [36][38] Question: Balance sheet update and debt management - Management highlighted the importance of a strong capital structure and mentioned recent debt refinancings to enhance liquidity and financial flexibility [45][46] Question: Strength of residential broadband ARPU - Management reported a 0.4% year-over-year growth in residential ARPU, driven by broadband and mobile services, despite video headwinds [50][51] Question: Expectations around video programming costs - Management indicated a focus on renegotiating programming costs, achieving a 16% reduction in the quarter, and emphasized a disciplined approach to pricing and packaging [56][57] Question: Competitive landscape and market pressures - Management described the competitive environment as intense, particularly in the East with significant fiber overbuild, but expressed confidence in their product offerings and pricing strategies [65][66]