Altice USA shares fell as much as 16% in early trading Thursday, after CEO Dexter Goei said broadband subscribers would be down by as much as 15,000 to 20,000 customers in the third quarter.
Shares in the New York-based MSO were trading as low as $21.21 early Thursday, down 16% or $4.05 per share. The stock closed at $22.06, down $3.20 or 12.7% each on Sept. 23.
Some analysts had expected Altice USA to add about 22,000 broadband customers in Q3, down from the 26,000 it added in the same period last year but higher than the 15,000 it added in Q3 2019. Other cable operators have said that they expect broadband growth to slow in Q3, as the positive customer growth effects tied to the pandemic begin to wane.
At the Goldman Sachs Communacopia conference Thursday, Goei said that high-speed internet customer additions would be negative.
“Our numbers are going to be negative coming into Q3 in terms of internet adds, probably to the tune of 15,000 to 20,000, which gets us to a trend of being flattish to slightly up for the year,” Goei said, adding that the operator averaged about 72,000 internet adds in 2018 and 2019 and 145,000 additions last year. “If we are flattish to slightly up this year, we’ll be breakeven over the last four years. That is disappointing.”
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Goei said that lower than expected gross adds, the result of “underwhelming” back-to-school performance in its markets in late August and into September, was the main culprit for the negative broadband additions. But the CEO is hopeful that new efforts launched at the beginning of September, like increasing the speeds of its Altice Advantage Internet product to 50 Megabits per second (a 65% boost), renaming it Optimum Advantage and keeping its price point at $14.99 per month, will boost subscriber rolls. In July, Altice said it would rebrand its Altice Mobile product as Optimum Mobile, the first step in aligning all of its brands under the Optimum name.
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“These are getting some traction,” Goei said. “We are hopeful that in Q4 we’ll see back-to- normalized trends and positive net adds and we continue to be very, very focused on increasing our investment in the network and our distribution channels.”
Goei also commented on the recent departure of chief operating officer Hakim Boubazine, adding that the executive had a long successful history with the company, but that it was time for a change. Boubazine said earlier this month that he would step down at the end of the year, and in the meantime would serve as a special adviser to the company. Goei would take on his duties in addition to those of CEO.
Goei said despite Boubazine‘s success in the past, operating trends have been “a little underperforming” over the past few years. He added that the change will help the company execute more quickly on its goals, as well as allowing the organization to react to change in a more flexible way.
“We thought it was a good time to make that change,” Goei said. “Me coming in really helps flatten the organization, allows people to have a lot more say in their opinions and it rises quickly to my attention and be able to react in a much more flexible way. The tenets and the foundations of what we want to do remain the same. … The buck will stop with me.”
