Altice Poised For Solid Growth With Core Focus, Risks Remain
Zacks Investment Research | Apr 08, 2018 10:42PM ET
On Apr 9, we issued an updated research report on Altice USA, Inc. (NYSE:ATUS) , one of the largest broadband communications and video services providers in the United States.
Altice is on track with its five-year plan to build a FTTH (fiber to the home) network and deploy its new home communications hub. The company believes the FTTH network will be more resilient with reduced maintenance requirements, fewer service outages and lower power usage, which is likely to lead to further cost efficiencies. This network will allow Altice to satisfy demand for increasing speeds and support evolving technologies, such as the expected transition of mobile networks to 5G and enable it to capitalize on associated revenue-growth opportunities.
At the same time, the company has been rolling out enhanced data and services for its business customers. Altice Business, which was formed by clubbing its Lightpath, Optimum and Suddenlink business brands under a single umbrella, offers the best-in-class data, voice, video and managed services to about 2 million customers. As part of this effort, Altice Business has standardized its product portfolio footprint-wide, providing customers with access to services that meet their needs, regardless of size or region, and creating more value and choice. Additionally, the company is building a next-generation fiber network capable of delivering broadband speeds of 10 Gbps, reflecting Altice’s continued investment in technology and innovation for its customers in the United States.
Altice also augmented its market position as a pioneer in the advertising business with the launch of a4 — an advanced advertising tool — to provide audience-based, multiscreen advertising solutions for its clients. With this, the company has successfully implemented its strategic plan to strengthen footprint in digital advertising through multiple acquisitions and investments.
From being the first MVPD (multichannel video programming distributor) partner to offer addressable advertising solutions in the New York DMA, Altice has evolved as a leading player in this segment and has subsequently created a niche market for itself. This was achieved through the acquisitions of Cablevision (NYSE:CVC) in 2015, followed by Audience Partners, a leading provider of authenticated IP addressability technology, and Placemedia, a premier provider of programmatic ad solutions for OTT and on-demand television.
With the successful integration of these businesses with Cablevision’s advertising and data business, Altice has brought to the fore unique skill sets for advertisers to identify the target audience across screens and local and national TV. They can then create an effective media plan, execute the buy and measure cross-screen reach, frequency and attribution to measure the efficacy of the program.
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Leveraging the superior reach of a4, advertisers can reportedly extend their content to more than 90 million households, 85% of broadband subscribers and 1 billion devices in the United States. This would significantly benefit advertisers to screen their advertising messages to target pool of audience, thereby reducing operating costs.
However, Altice has underperformed the Zacks Investment Research
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